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Exco Results for Third Quarter Ended June 30, 2022

July 28, 2022 17:01 ET | Source: Exco Technologies Ltd.

  • Consolidated third quarter Sales of $129.2 million compared to $115.0 million in the prior year
  • Net Income of $5.6 million and EPS of $0.14
  • EBITDA of $14.6 million compared to $15.2 million in the prior year
  • Halex Extrusion acquisition closed on May 2, 2022
  • Growth capital expenditure strategy on track with $29.3 million in year-to-date spending
  • Quarterly dividend of $0.105 per common share to be paid September, 30 2022

TORONTO, July 28, 2022 (GLOBE NEWSWIRE) — Exco Technologies Limited (TSX-XTC, OTCQX-EXCOF) today announced results for its third quarter of fiscal 2022 ended June 30, 2022. In addition, Exco announced a quarterly dividend of $0.105 per common share which will be paid on September 30, 2022 to shareholders of record on September 16, 2022. The dividend is an “eligible dividend” in accordance with the Income Tax Act of Canada.

“We continued to advance our aggressive growth agenda this quarter, completing the acquisition of Halex Extrusion Dies and making solid progress with our various capital projects”, said Darren Kirk, Exco’s President and CEO. “Our results demonstrate Exco’s ability to navigate through very challenging market conditions while benefiting from the electric vehicle revolution and worldwide movement towards reducing emissions”

Consolidated sales for the third quarter ended June 30, 2022 were $129.3 million compared to $115.0 million in the same quarter last year – an increase of $14.3 million, or 12%. Excluding foreign exchange rate movements, consolidated sales in the quarter were higher by 10% compared to the prior year and higher by 1% year-to-date.

The Automotive Solutions segment reported sales of $64.6 million in the third quarter – an increase of $3.6 million, or 6% from the prior year quarter. Excluding foreign exchange rate movements, segment revenues were higher by $2.6 million, or 4% for the quarter. Segment sales in the quarter were primarily influenced by vehicle production volumes in North American and Europe. IHS Markit estimates volumes increased 12% in North America and declined 5% in Europe compared to the prior year quarter. Segment sales were also negatively influenced by unfavorable vehicle mix, partially offset by ongoing key program launches for new and existing products as well as certain pricing actions taken to protect margins. While industry vehicle production volumes have shown some signs of improvement, they remain below the level of consumer demand due to supply chain disruptions (including the global semiconductor shortage), broad labour availability challenges, logistical constraints and ongoing COVID lockdown measures in China. European volumes are incrementally affected by localized supply chain challenges on that continent due to the Russian invasion of Ukraine. Nonetheless, HIS Markit expects North American and European production to grow through the second half of calendar 2022, which is expected to benefit segment results. Quoting opportunities have strengthened across the segment’s various businesses, which, together with new and ongoing product launches, are expected to support continued gains in Exco’s content per vehicle.

The Casting and Extrusion segment reported sales of $64.7 million for the third quarter – an increase of $10.7 million or 20%, from the same period last year. Foreign exchange rate changes increased sales $1.5 million in the quarter. The Company’s new European facilities (Halex) contributed $9.0 million of sales in the quarter, reflecting two months of activities. Demand for our extrusion tooling (ie dies, dummy blocks, stems, etc) and associated capital equipment (die ovens, containers, etc) remained strong due to both industry growth and ongoing market share gains. Demand for extrusion tools covers many industrial sectors including building and construction, large truck, electric vehicles, and many green energy sectors, all of which are focused on reducing energy intensity and reducing emissions. In anticipation of these trends intensifying, Exco has been increasing its manufacturing footprint in local markets in recent years including the acquisition of Halex in Europe. Management also remains focused on standardizing manufacturing processes, enhancing engineering depth and centralizing support functions across its various plants. These initiatives have reduced lead times, enhanced product quality, expanded product breadth and increased capacity, all of which has supported market share gains.

In the die-cast market, which primarily serves the automotive industry, demand has remained suppressed due to lower vehicle production volumes, which in turn, is due mainly to broader supply chain constraints. These constraints have been amplified by customer inventory destocking activity in recent quarters, particularly in the large mould segment, which has faced significantly lower rebuild work than typical. Demand and order flow for new moulds, associated tooling (shot sleeves, rods, rings, tips, etc) and even rebuild work however has recently picked up as industry vehicle production recovers and new electric vehicles and more efficient internal combustion engine/ transmission platforms are launched. In addition, demand for Exco’s industry leading additive (3D printed) tooling has continued to gain significant traction as customers focus on greater efficiency as the size and complexity of die cast tooling continues to increase. Sales in the quarter were also aided by price increases, which were implemented in order to protect margins from higher input costs. With respect to quoting activity, longer lead time items continue to see elevated demand for future activity (particularly large moulds) and inventories and backlog continue to grow which is expected to bode well for sales through the remainder of fiscal 2022 and into fiscal 2023.

Consolidated net income for the third quarter was $5.6 million or basic and diluted earnings of $0.14 per share compared to $8.7 million or $0.22 per share in the same quarter last year – a decrease of net income of $3.1 million. The consolidated effective income tax rate of 24% in the current quarter increased from 12% from the prior year. The change in income tax rate in the quarter was impacted by fiscal 2021 SRED tax credits booked in the third quarter last year, nondeductible losses from our Castool Morocco facility in fiscal 2022, geographic distribution, and foreign tax rate differentials

The Automotive Solutions segment reported pretax profit of $4.8 million in the third quarter a decrease of $0.3 million from the prior year quarter. The segment’s lower pretax profit was due to unfavorable market driven product mix changes, higher raw material, logistics and labour costs, the reversal of certain bad debt accruals last year, partially offset by certain pricing actions taken. Reduced industry vehicle production continued to cause inefficiencies within our operations. While customer orders and releases stabilized compared to prior quarters, sporadic and unreliable customer releases continued to impact production, increasing overhead and direct labour costs. These factors were intensified as we retained slack labour in anticipation of higher demand in the quarters ahead. Inflationary pressure continues to be a challenge in this segment particularly on petroleum-based products (resins, plastics, rubber), energy, freight and labour. Management remains focused on improving the efficiency of its operations and reducing its overall cost structure. Pricing discipline remains a focus and actions are being taken on current programs where possible, though there is typically a lag of a few quarters before the impact is realized. As well, new program awards are priced to reflect management’s expectations for higher future costs.

The Casting and Extrusion segment reported $4.8 million of pretax profit in the third quarter – a decrease of $3.0 million from the same quarter last year. The lower pretax profit was primarily driven by reduced activity for rebuild work in the Large Mould group coupled with shipments of new moulds. New mould programs can often have low to negative margins at the onset due to front-end inefficiencies that are improved as subsequent moulds are delivered. As well, profitability was negatively impacted by raw material and labour cost inflation, unfavorable market driven product mix shifts, reduced labour availability and higher overtime costs across the three business units. Start-up losses of Castool’s plant in Morocco (which opened in November 2021), and new heat treatment operations in Newmarket also negatively impacted profitability, mainly due to non-cash depreciation of plant and equipment. Segment pre-tax profitability however benefited from contributions from the acquisition of Halex and was higher sequentially for the second consecutive quarter. New business awards across the quarter remained very strong, particularly for structural die-cast components and those for electric vehicle platforms. The segment ended the quarter with backlogs approaching historic high levels. Management remains focused on taking pricing action where possible to preserve margins, reducing its overall cost structure and improving manufacturing efficiencies. Such activities together with sales efforts are expected to improve segment profitability in future quarters.  

Consolidated EBITDA for the third quarter totaled $14.6 million compared to $15.2 million in the same quarter last year – a decrease of $0.6 million. For the quarter, EBITDA as a percentage of sales decreased to 11.3% in the current period compared to 13.2% the prior year driven by a reduction in segment margins in both the Casting & Extrusion segment (15% compared to 21%) and the Automotive Solutions segment (10% compared to 11%).

Exco generated cash from operating activities of $14.1 million during the quarter and $9.9 million of Free Cash Flow after $3.5 million in Maintenance Fixed Asset Additions. This cash flow, together with cash on hand was more than sufficient to fund fixed assets for growth initiatives of $12.0 million and $4.1 million of dividends. Exco utilized $60 million of its credit facility to fund its investment in Halex. The growth capital expenditure initiatives include: a) new Castool production facilities in Morocco and Mexico. The Moroccan facility opened in November 2021 and the Mexican facility which began construction in the second quarter. b) Investment in new heat treatment equipment in the tooling group to increase capacity, reduce emissions and enable us to in-source most of our requirements. c) Investments in the Large Mould group to upgrade its capabilities to handle moulds of extreme sizes which we expect will be increasingly demanded by most traditional and new OEMs. d) Investment in additional 3D printing machinery in our tooling group to meet strong customer demands. e) Expansion of two of our production facilities in the Automotive Solutions group to provide added capacity for awarded programs.   Exco ended the quarter with $65 million in net indebtedness. The company has $33.9 million in available liquidity under its credit facility and $26.6 million of balance sheet cash, continuing its practice of maintaining a very strong balance sheet and liquidity position.

Outlook

Despite current macro-economic challenges, including tightening monetary conditions, the overall outlook is very favorable across Exco’s segments into the medium term. Consumer demand for automotive vehicles is currently outstripping supply in most markets, which are constrained by a shortage of semiconductor chips and, to a lesser extent, other raw materials, components and availability of labour. Dealer inventory levels are near record lows, while average transaction prices for both new and used vehicles are at record highs and the average age of the broader fleet has continued to increase to an all-time high. This bodes well for higher levels of future vehicle production and the sales opportunity of Exco’s various automotive components and accessories once supply chains normalize. In addition, OEM’s are increasingly looking to the sale of higher margin accessory products as a means to enhance their own levels of profitability. Exco’s Automotive Solutions segment derives a significant amount of activity from such products and is a leader in the prototyping, development and marketing of the same. Moreover, the rapid movement towards an electrified fleet for both passenger and commercial vehicles is enticing new market entrants into the automotive market while causing traditional OEM incumbents to further differentiate their product offerings, all of which is driving above average opportunities for Exco.

With respect to Exco’s Casting and Extrusion segment, the intensifying global focus on environmental sustainability is creating significant growth drivers that are expected to persist through at least the next decade. Automotive OEMs are looking to light-weight metals such as aluminum to reduce vehicle weight and reduce carbon dioxide emissions. This trend is evident regardless of powertrain design – whether internal combustion engines, electric vehicles or hybrids. As well, a renewed focus on the efficiency of OEMs in their own manufacturing process is creating higher demand for advanced tooling that can contribute towards their profitability and sustainability goals. Certain new EV manufacturers have adopted the approach of utilizing much larger die cast machines to cast entire sub-frames of vehicles out of an aluminum based alloy rather than assemble numerous pieces of separately stamped and welded pieces of ferrous metal. Exco expects traditional OEMs will ultimately follow this trend and is positioning its operations to capitalize accordingly. Beyond the automotive industry, Exco’s extrusion tooling supports diverse end markets which are also seeing increased demand for aluminum driven by environmental trends, including energy efficient buildings, solar panels, etc.

On the cost side, inflationary pressures have intensified in recent quarters while prompt availability of various input materials, components and labour has become more challenging. We are offsetting these dynamics through various efficiency initiatives and taking pricing action where possible although there is typically several quarters of lag before the counter measures are evident.

The Russian invasion of Ukraine has added additional uncertainty to the global economy in recent months. And while Exco has essentially no direct exposure to either of these countries, Ukraine does feed into the European automotive markets and Europe has significant dependence on Russia for its energy needs.

Exco itself is also looking inwards with respect to ESG and sustainability trends to ensure its own operations are sustainable. We are investing significant capital to improve the efficiency and capacity of our own operations while lowering our own carbon footprint. In the first quarter we released our first Sustainability Report on our corporate website which is available at: www.excocorp.com/leadership/sustainability/.

Exco is currently targeting a compounded average annual growth rate (excluding acquisitions) of approximately 10% for revenues and slightly higher levels for EBITDA and Net Income through fiscal 2026, which is expected to produce an annual EPS of roughly $1.90 by the end of this timeframe. This target is expected to be achieved through the launch of new programs, general market growth, and also market share gains consistent with the Company’s operating history. Capital investments will remain elevated in the balance of the fiscal year in order to position the Company for the significant growth opportunities we see. Capital expenditures are expected to exceed $55 million for fiscal 2022.

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

Non-IFRS Measures:  In this News Release, reference may be made to EBITDA, EBITDA Margin, Pretax Profit, Free Cash Flow and Maintenance Fixed Asset Additions which are not measures of financial performance under International Financial Reporting Standards (“IFRS”). Exco calculates EBITDA as earnings before interest, taxes, depreciation, amortization and other expenses and EBITDA Margin as EBITDA divided by sales. Exco calculates Pretax Profit as segmented earnings before other income/expense, interest and taxes.  Free Cash is calculated as cash provided by operating activities less interest paid and Maintenance Fixed Asset Additions. Maintenance Fixed Asset Additions represents investment in fixed assets that are required to continue current capacity levels. EBITDA, EBITDA Margin, Pretax Profit and Free Cash Flow are used by management, from time to time, to facilitate period-to-period operating comparisons and we believe some investors and analysts use these measures as well when evaluating Exco’s financial performance. These measures, as calculated by Exco, do not have any standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other issuers. 

Quarterly Conference Call – July 29, 2022 at 10:30 a.m. (Toronto time):

To access the listen only live audio webcast, please log on to www.excocorp.com, or https://edge.media-server.com/mmc/p/x9fpqsmi a few minutes before the event. Those interested in participating in the question-and-answer conference call may register at https://register.vevent.com/register/BI3526160340204f7ea2ca7e205c624f44 to receive the dial-in numbers and unique PIN to access the call. It is recommended that you join 10 minutes prior to the event start (although you may register and dial in at any time during the call). For those unable to participate on July 29, 2022, an archived version will be available on the Exco website until August 13, 2022.

  
Source:Exco Technologies Limited (TSX-XTC)
Contact:Darren Kirk, President and CEO
Telephone:(905) 477-3065 Ext. 7233
Website:https://www.excocorp.com
  

About Exco Technologies Limited:

Exco Technologies Limited is a global supplier of innovative technologies servicing the die-cast, extrusion and automotive industries.  Through our 20 strategic locations in 9 countries, we employ approximately 5,000 people and service a diverse and broad customer base.

Notice To Reader: Forward Looking Statements

This press release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. We may use words such as “anticipate”, “may”, “will”, “should”, “expect”, “believe”, “estimate”, “5-year target” and similar expressions to identify forward-looking information and statements especially with respect to growth, outlook 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, liquidity, operating efficiencies, improvements in, expansion of and/or guidance or outlook as to future revenue, sales, production sales, margin, earnings, earnings per share, including the outlook for 2026, are forward-looking statements. 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. These forward-looking statements are based on our plans, intentions or expectations which are based on, among other things, the current improving global economic recovery from the COVID-19 pandemic and containment of any future or similar outbreak of epidemic, pandemic, or contagious diseases that may emerge in the human population, which may have a material effect on how we and our customers operate our businesses and the duration and extent to which this will impact our future operating results, the impact of the Russian invasion of Ukraine on the global financial and automotive markets, including increased supply chain risks, assumptions about the number of automobiles produced in North America and Europe, production mix between passenger cars and trucks, 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 in response to rising climate risks, raw material prices, supply disruptions, economic conditions, inflation, currency fluctuations, trade restrictions, our ability to integrate acquisitions, our ability to continue increasing market share, or launch of new programs and the rate at which our current and future greenfield operations in Mexico and Morocco achieve sustained profitability. Readers are cautioned not to place undue reliance on forward-looking statements throughout this document and are also cautioned that the foregoing list of important factors is not exhaustive. 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. 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 or www.excocorp.com.

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Exco Technologies Limited Announces Third Quarter Results on July 28, 2022

TORONTO, July 08, 2022 (GLOBE NEWSWIRE) — Exco Technologies Limited (TSX – XTC) today announced that it will report its financial results for the third quarter ended June 30, 2022 after the close of business on Thursday July 28, 2022.

Exco’s management will hold a conference call to discuss the results on Friday July 29, 2022 at 10:30 a.m. Eastern Time. To access the listen only live audio webcast, please log on to www.excocorp.com, or https://edge.media-server.com/mmc/p/x9fpqsmi a few minutes before the event.

Those interested in participating in the question-and-answer conference call may register at https://register.vevent.com/register/BI3526160340204f7ea2ca7e205c624f44 to receive the dial-in numbers and unique PIN to access the call. It is recommended that you join 10 minutes prior to the event start (although you may register and dial in at any time during the call).

A webcast replay of the call will be available on the Company’s website beginning on July 29, 2022 at approximately 1:00 pm Eastern Time until August 13, 2022.  

Exco Technologies Limited is a global supplier of innovative technologies servicing the die-cast, extrusion and automotive industries.  Through our 20 strategic locations in 9 countries, we employ approximately 5,000 people and service a diverse and broad customer base.

Source:Exco Technologies Limited (TSX-XTC)
Contact:Darren Kirk, President & Chief Executive Officer
Telephone:(905) 477-3065, Ext 7233
Website:https://www.excocorp.com
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Exco Technologies Ltd to Webcast Live at VirtualInvestorConferences.com July 7th

TORONTO, July 04, 2022 (GLOBE NEWSWIRE) — Exco Technologies Ltd (XTC: TSX; EXCOF: OTCQX), a global supplier of innovative technologies servicing the die-cast, extrusion and automotive industries, today announced that Darren Kirk, President and CEO, and Matthew Posno, CFO will present live at VirtualInvestorConferences.com on July 7th, 2022.

DATE:July 7th, 2022
TIME:10:30am EST
LINK:https://bit.ly/3y5j732

This will be a live, interactive online event where investors are invited to ask the company questions in real-time. If attendees are not able to join the event live on the day of the conference, an archived webcast will also be made available after the event.

Exco will also be available for 1×1 meetings: 9am – 5pm EST July 8, 11 and 12th, 2022

It is recommended that investors pre-register and run the online system check to expedite participation and receive event updates.

Learn more about the event at www.virtualinvestorconferences.com.

About Exco

Exco Technologies Limited is a global supplier of innovative technologies servicing the die-cast, extrusion and automotive industries. Our various businesses directly support the electric vehicle revolution and contribute positively to global sustainability goals. Through our 20 strategic locations in 9 countries, we employ about 5,000 people and service a diverse and broad customer base. www.excocorp.com

About Virtual Investor Conferences®
Virtual Investor Conferences (VIC) is the leading proprietary investor conference series that provides an interactive forum for publicly traded companies to seamlessly present directly to investors.

Providing a real-time investor engagement solution, VIC is specifically designed to offer companies more efficient investor access. Replicating the components of an on-site investor conference, VIC offers companies enhanced capabilities to connect with investors, schedule targeted one-on-one meetings and enhance their presentations with dynamic video content. Accelerating the next level of investor engagement, Virtual Investor Conferences delivers leading investor communications to a global network of retail and institutional investors.

CONTACTS:
Exco Technologies Ltd
Darren Kirk
President and CEO
905-477-3065 x 7233
dkirk@excocorp.com

Virtual Investor Conferences
John M. Viglotti
SVP Corporate Services, Investor Access
OTC Markets Group
212-220-2221
johnv@otcmarkets.com

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Exco Technologies Limited Closes Acquisition of Halex Extrusion Dies

May 02, 2022 17:01 ET | Source: Exco Technologies Ltd.

TORONTO, May 02, 2022 (GLOBE NEWSWIRE) — Exco Technologies Limited (TSX-XTC, OTCQX-EXCOF) a global supplier of innovative technologies servicing the die-cast, extrusion and automotive industries, today announced it closed the acquisition of the extrusion dies business of Halex Holdings GmbH (“Halex® Extrusion Dies”) effective Monday May 2, 2022.

Halex Extrusion Dies was founded in 1997 and operates four key manufacturing locations – two in Germany and two in the northern industrial region of Italy. The company is the second largest manufacturer of aluminium extrusion dies in Europe and the continent’s leading supplier of complex extrusion dies. Halex will complement Exco’s six existing extrusion die operations, located in Canada, USA (2), Mexico, Colombia and Brazil.

As previously announced on December 20, 2021, the transaction is valued at €40 million on an enterprise value basis and was funded with a combination of cash on hand and available bank lines. Halex will add approximately €40 million in annual sales and is expected to be immediately accretive to Exco’s earnings per share. Exco will report the results of Halex within its Casting and Extrusion segment.

Source:  Exco Technologies Limited (TSX-XTC, OTCQX-EXCOF)
Contact:   Darren Kirk, President and Chief Executive Officer
Telephone: (905) 477-3065 Ext. 7233
Website: https://www.excocorp.com

About Exco Technologies Limited:

Exco Technologies Limited is a global supplier of innovative technologies servicing the die-cast, extrusion and automotive industries. Through our 20 strategic locations in 9 countries, we employ about 5,000 people and service a diverse and broad customer base.

Notice To Reader: Forward Looking Statements

This press release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. We may use words such as “anticipate”, “may”, “will”, “should”, “expect”, “believe”, “estimate”, “5-year target” and similar expressions to identify forward-looking information and statements especially with respect to growth, outlook 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, liquidity, operating efficiencies, improvements in, expansion of and/or guidance or outlook as to future revenue, sales, production sales, margin, earnings, earnings per share, including the outlook for 2026, are forward-looking statements. 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. These forward-looking statements are based on our plans, intentions or expectations which are based on, among other things, the current improving global economic recovery from the COVID-19 pandemic and containment of any future or similar outbreak of epidemic, pandemic, or contagious diseases that may emerge in the human population, which may have a material effect on how we and our customers operate our businesses and the duration and extent to which this will impact our future operating results, the impact of the Russian invasion of Ukraine on the global financial and automotive markets, including increased supply chain risks, assumptions about the number of automobiles produced in North America and Europe, production mix between passenger cars and trucks, 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 in response to rising climate risks, raw material prices, supply disruptions, economic conditions, inflation, currency fluctuations, trade restrictions, our ability to integrate acquisitions, our ability to continue increasing market share, or launch of new programs and the rate at which our current and future greenfield operations in Mexico and Morocco achieve sustained profitability. Readers are cautioned not to place undue reliance on forward-looking statements throughout this document and are also cautioned that the foregoing list of important factors is not exhaustive. 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. 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 or www.excocorp.com.

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Exco Results for Second Quarter Ended March 31, 2022

April 27, 2022 17:15 ET | Source: Exco Technologies Ltd.

  • Consolidated Sales of $119.3 million and EBITDA of $12.5 million
  • Net Income of $5.1 million and EPS of $0.13
  • Enhanced liquidity with renewed and upsized $125 million 3-year revolver
  • Growth capital expenditure strategy on track with $22 million in year-to-date spending
  • Halex Extrusion acquisition expected to close in Exco’s third quarter
  • Quarterly dividend of $0.105 per common share to be paid June, 30 2022

TORONTO, April 27, 2022 (GLOBE NEWSWIRE) — Exco Technologies Limited (TSX-XTC, OTCQX-EXCOF) today announced results for its second quarter of fiscal 2022 ended March 31, 2022. In addition, Exco announced a quarterly dividend of $0.105 per common share which will be paid on June 30, 2022 to shareholders of record on June 16, 2022. The dividend is an “eligible dividend” in accordance with the Income Tax Act of Canada.

“Exco’s second quarter results reflect very challenging market conditions, but also demonstrate the strong demand for our various industry-leading products and solutions”, said Darren Kirk, Exco’s President and CEO. “We are taking the necessary actions to ensure our profitability continues to recover while continuing to push ahead with our various growth projects. We expect stronger results in the second half of our fiscal year.”

Consolidated sales for the second quarter ended March 31, 2022 were $119.3 million compared to $118.4 million in the same quarter last year — an increase of $0.9 million, or 1%. Excluding foreign exchange rate fluctuations sales increased 2% during the quarter.

The Automotive Solutions segment reported sales of $68.2 million in the second quarter — a decrease of $1.1 million, or 2% from the prior year quarter. Foreign exchange rate movements decreased segment sales by $1.3 million in the quarter. Excluding foreign exchange rate movements on Exco’s results, segment revenues were unchanged during the quarter. After adjusting for the impact of foreign exchange rate movements, the segment continues to perform well above IHS vehicle production estimates of negative 3% in North America and negative 18% in Europe in the quarter. Industry vehicle production volumes continue to be negatively impacted by supply chain disruptions (particularly the global semiconductor shortage), broad labour availability and logistical constraints. Additional supply chain dislocations have also arisen in Europe since February 2022 due to the Russian invasion of Ukraine. Segment sales were nonetheless supported by ongoing key program launches for both new and existing products, certain pricing actions taken to protect margins and favourable vehicle mix with these trends generally improving through the quarter. Quoting opportunities have also strengthened of late across the segment’s various businesses, which, together with pipeline launches, is expected to support continued gains in Exco’s content per vehicle.

The Casting and Extrusion segment reported sales of $51.1 million for the second quarter — an increase of $2.0 million or 4%, from the same period last year. Foreign exchange rate changes were negligible in the quarter. Within the segment, demand for our extrusion tooling (i.e. dies, dummy blocks, stems, etc.) and associated capital equipment (die ovens, containers, etc.) remained strong due to both industry growth, and ongoing market share gains. Exco has been increasing its manufacturing footprint in local markets in recent years, while focusing on standardizing manufacturing processes, enhancing engineering depth and centralizing support functions across its various plants. These initiatives have reduced lead times, enhanced product quality, expanded product breadth and increased capacity, all of which has supported market share gains. In the die-cast market, which primarily serves the automotive industry, demand has remained suppressed due to lower vehicle production volumes. Consequently, the Large Mould group has faced significantly lower rebuild work than typical. Demand for Exco’s industry leading additive (3D printed) tooling has continued to gain traction as customers focus on greater efficiency as the size and complexity of die cast tooling continues to increase. Sales were also aided by price increases which were implemented in order to protect margins from higher input costs. With respect to quoting activity, demand for new moulds, associated tooling (shot sleeves, rods, rings, tips, etc.) and rebuild work has recently picked up meaningfully as industry vehicle production recovers and new electric vehicles and more efficient internal combustion engine/transmission platforms are launched. Inventories and backlog continue to grow which is expected to bode well for sales through the remainder of fiscal 2022.

Consolidated net income for the second quarter was $5.1 million or basic and diluted earnings of $0.13 per share compared to $11.7 million or $0.30 per share in the same quarter last year — a decrease of net income of $6.6 million. The consolidated effective income tax rate of 23% in the current quarter increased from 22% from the prior year. The income tax rate was impacted by nondeductible losses from our Castool Morocco facility, geographic distribution, and foreign rate differentials.

The Automotive Solutions segment reported pretax profit of $6.2 million in the second quarter a decrease of $3.2 million from the prior year quarter. The segment’s lower pretax profit was due to unfavorable market driven product mix changes, higher material, logistics and labour costs, partially offset by certain pricing actions taken in the quarter. While customer orders and releases stabilized compared to prior quarters, sporadic and unreliable customer releases continued to impact production, increasing overhead and direct labour costs. These factors were intensified by reduced labour availability due to the increased prevalence of COVID-19 a well as the need to retain slack labour in anticipation of higher demand in the quarters ahead. Inflationary pressure particularly on petroleum based products, energy, freight and labour continue. Management remains focused on improving the efficiency of its operations and reducing its overall cost structure. Pricing discipline also remains a focus and new program awards include management’s expectations for higher future costs.

The Casting and Extrusion segment reported $2.7 million of pretax profit in the second quarter – a decrease of $4.7 million from the same quarter last year. The lower pretax profit was driven by reduced activity for rebuild work in the Large Mould group, the shipment of a number of new moulds, raw material and labour cost inflation, unfavorable market driven product mix shifts, start-up losses of Castool’s plant in Morocco (which opened in November 2021), reduced labour availability and higher overtime costs due to the spread of COVID-19. Segment pre-tax profitability was however higher sequentially and new business awards across the quarter were very strong, particularly for structural die-cast components and those for electric vehicle platforms. The Large Mould and Castool groups ended the quarter with backlogs approaching historic levels. Management remains focused on taking pricing action where possible to preserve margins, reducing its overall cost structure and improving manufacturing efficiencies. Such activities together with sales efforts are expected to improve segment profitability in future quarters.

Consolidated EBITDA for the second quarter totaled $12.5 million compared to $20.2 million in the same quarter last year — a decrease of $7.7 million, or 38%. Year-to-date, consolidated EBITDA totaled $21.9 million compared to $39.6 million last year – a decrease of $17.7 million, or 45%. For the quarter, EBITDA as a percentage of sales decreased to 10.5% compared to 17.1% the prior year driven by an improvement in segment margins in both the Casting & Extrusion segment (13% compared to 22%) and the Automotive Solutions segment (11% compared to 16%).

Exco generated cash from operating activities of $5.3 million during the quarter and $3.5 million of Free Cash Flow after $1.6 million in Maintenance Fixed Asset Additions. This cash flow, together with cash on hand was more than sufficient to fund fixed assets for growth initiatives of $9.1 million and $4.1 million of dividends. The growth initiatives include: a) new Castool production facilities in Morocco and Mexico. The Moroccan facility opened in November 2021 and the Mexican facility recently commenced construction. b) Investment in new heat treatment equipment in the tooling group to increase capacity, reduce emissions and enable us to in-source most of our requirements. c) Investments in the Large Mould group to upgrade its capabilities to handle moulds of extreme sizes which we expect will be increasingly demanded by most traditional and new OEMs. d) Investment in additional 3D printing machinery in our tooling group to meet strong customer demands. e) Expansion of two of our production facilities in the Automotive Solutions group to provide added capacity for awarded programs. Exco ended the year with $0.3 million in net cash and $125.3 million in available liquidity, including $26.3 million of balance sheet cash, continuing its practice of maintaining a very strong balance sheet and liquidity position.

During the first quarter, the Company signed a definitive agreement to acquire the extrusion dies business of Halex Holdings GmbH (“Halex® Extrusion Dies”). Halex Extrusion Dies was founded in 1990 and operates four key manufacturing locations — two in Germany and two in the northern industrial region of Italy. The company is the second largest manufacturer of aluminium extrusion dies in Europe and the continent’s leading supplier of complex extrusion dies. Halex will complement Exco’s six existing extrusion die operations, located in Canada, USA (2), Mexico, Colombia and Brazil. The acquisition will provide Exco with well-established and high-quality operations, manufacturing complex extrusion dies in Europe and will provide better support for the Company’s global customers.

The transaction is expected to close in the spring of 2022 and is valued at €40 million (C$58 million equivalent) on an enterprise value basis. It will be funded with a combination of cash on hand and available bank lines. Halex will add approximately €40 million in annual sales and is expected to be immediately accretive to Exco’s earnings per share. Exco will report the results of Halex within its Casting and Extrusion segment.

Outlook

Despite current macro-economic challenges, the overall outlook is very favorable across Exco’s various businesses into the medium term. Consumer demand for automotive vehicles is currently outstripping supply in most markets, which are constrained by a shortage of semiconductor chips and, to a lesser extent, other raw materials, components and availability of labour. Dealer inventory levels are near record lows, while average transaction prices for both new and used vehicles are at record highs and the average age of the broader fleet has continued to increase to an all-time high. This bodes well for higher levels of future vehicle production and the sales opportunity of Exco’s various automotive components and accessories once supply chains normalize. In addition, OEM’s are increasingly looking to the sale of higher margin accessory products as a means to enhance their own levels of profitability. Exco’s Automotive Solutions segment derives a significant amount of activity from such products and is a leader in the prototyping, development and marketing of the same. Moreover, the rapid movement towards an electrified fleet for both passenger and commercial vehicles is enticing new market entrants into the automotive market while causing traditional OEM incumbents to further differentiate their product offerings, all of which is driving above average opportunities for Exco.

With respect to Exco’s Casting and Extrusion segment, the intensifying global focus on environmental sustainability is creating significant growth drivers that are expected to persist through at least the next decade. Automotive OEMs are looking to light-weight metals such as aluminum to reduce vehicle weight and reduce carbon dioxide emissions. This trend is evident regardless of powertrain design — whether internal combustion engines, electric vehicles or hybrids. As well, a renewed focus on the efficiency of OEMs in their own manufacturing process is creating higher demand for advanced tooling that can contribute towards their profitability and sustainability goals. Certain new EV manufacturers have adopted the approach of utilizing much larger die cast machines to cast entire sub-frames of vehicles out of an aluminum based alloy rather than assemble numerous pieces of separately stamped and welded pieces of ferrous metal. Exco expects traditional OEMs will ultimately follow this trend and is positioning its operations to capitalize accordingly. Beyond the automotive industry, Exco’s extrusion tooling supports diverse end markets which are also seeing increased demand for aluminum driven by environmental trends, including energy efficient buildings, solar panels, etc.

On the cost side, inflationary pressures have intensified in recent quarters while prompt availability of various input materials, components and labour has become more challenging. We are offsetting these dynamics through various efficiency initiatives and taking pricing action where possible although there are typically several quarters of lag before the counter measures are evident.

The Russian invasion of Ukraine has added additional uncertainty to the global economy in recent months. And while Exco has essentially no direct exposure to either of these countries, Ukraine does feed into the European automotive markets and Europe has significant dependence on Russia for its energy needs.

Exco itself is also looking inwards with respect to ESG and sustainability trends to ensure its own operations are sustainable. We are investing significant capital to improve the efficiency and capacity of our own operations while lowering our own carbon footprint. In the first quarter we released our first Sustainability Report on our corporate website which is available at: www.excocorp.com/leadership/sustainability/.     

Exco is currently targeting an organic compounded average annual growth rate of approximately 10% for revenues and slightly higher levels for EBITDA and Net Income through fiscal 2026, which is expected to produce an annual EPS of roughly $1.90 by the end of this timeframe. This target is expected to be achieved through the launch of new programs, general market growth, and also market share gains consistent with the Company’s operating history. Capital investments will remain elevated in the next few years in order to position the Company for the significant growth opportunities we see. Capital expenditures are expected to exceed $55 million for fiscal 2022.

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

Non-IFRS Measures:  In this News Release, reference may be made to EBITDA, EBITDA Margin, Pretax Profit, Free Cash Flow and Maintenance Fixed Asset Additions which are not measures of financial performance under International Financial Reporting Standards (“IFRS”). Exco calculates EBITDA as earnings before interest, taxes, depreciation, amortization and other expenses and EBITDA Margin as EBITDA divided by sales. Exco calculates Pretax Profit as segmented earnings before other income/expense, interest and taxes.  Free Cash is calculated as cash provided by operating activities less interest paid and Maintenance Fixed Asset Additions. Maintenance Fixed Asset Additions represents investment in fixed assets that are required to continue current capacity levels. EBITDA, EBITDA Margin, Pretax Profit and Free Cash Flow are used by management, from time to time, to facilitate period-to-period operating comparisons and we believe some investors and analysts use these measures as well when evaluating Exco’s financial performance. These measures, as calculated by Exco, do not have any standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other issuers. 

Quarterly Conference Call – April 28, 2022 at 10:30 a.m. (Toronto time):

To access the live audio webcast, please log on to www.excocorp.com, or https://edge.media-server.com/mmc/p/cuzbceqn a few minutes before the event. The conference call can also be accessed by dialling toll free at (866) 572-8261 or internationally at (703) 736-7448. The conference ID is 6584657.

For those unable to participate on April 28 2022, an archived version will be available on the Exco website.

  
Source:Exco Technologies Limited (TSX-XTC)
Contact:Darren Kirk, President and CEO
Telephone:(905) 477-3065 Ext. 7233
Website:https://www.excocorp.com
  

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 7 countries, we employ about 4,700 people and service a diverse and broad customer base.

Notice To Reader: Forward Looking Statements

This press release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. We may use words such as “anticipate”, “may”, “will”, “should”, “expect”, “believe”, “estimate”, “5-year target” and similar expressions to identify forward-looking information and statements especially with respect to growth, outlook 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, liquidity, operating efficiencies, improvements in, expansion of and/or guidance or outlook as to future revenue, sales, production sales, margin, earnings, earnings per share, including the outlook for 2026, are forward-looking statements. 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. These forward-looking statements are based on our plans, intentions or expectations which are based on, among other things, the current improving global economic recovery from the COVID-19 pandemic and containment of any future or similar outbreak of epidemic, pandemic, or contagious diseases that may emerge in the human population, which may have a material effect on how we and our customers operate our businesses and the duration and extent to which this will impact our future operating results, the impact of the Russian invasion of Ukraine on the global financial and automotive markets, including increased supply chain risks, assumptions about the number of automobiles produced in North America and Europe, production mix between passenger cars and trucks, 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 in response to rising climate risks, raw material prices, supply disruptions, economic conditions, inflation, currency fluctuations, trade restrictions, our ability to integrate acquisitions, our ability to continue increasing market share, or launch of new programs and the rate at which our current and future greenfield operations in Mexico and Morocco achieve sustained profitability. Readers are cautioned not to place undue reliance on forward-looking statements throughout this document and are also cautioned that the foregoing list of important factors is not exhaustive. 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. 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 or www.excocorp.com.

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Exco Technologies Limited Announces Second Quarter Results on April 27, 2022

TORONTO, April 07, 2022 (GLOBE NEWSWIRE) — Exco Technologies Limited (TSX – XTC) today announced that it will report its financial results for the second quarter ended March 31, 2022 after the close of business on Wednesday April 27, 2022.

Exco’s management will hold a conference call to discuss the results on Thursday April 28, 2022 at 10:30 a.m. To access the live audio webcast, please log on to www.excocorp.com, or https://edge.media-server.com/mmc/p/cuzbceqn a few minutes before the event. The conference call can also be accessed by dialling toll free at (866) 572-8261 or internationally at (703) 736-7448. The conference ID is 6584657.  

For those unable to participate on April 28, 2022, an archived version will be available until May 12, 2022 on the Exco website or by dialling toll free at (855) 859-2056 or internationally at (404) 537-3406. The conference ID is 6584657.

Exco Technologies Limited is a global supplier of innovative technologies servicing the die-cast, extrusion and automotive industries.  Through our 16 strategic locations in 7 countries, we employ approximately 4,900 people and service a diverse and broad customer base.

  
Source:  Exco Technologies Limited (TSX-XTC)
Contact: Darren Kirk, President & Chief Executive Officer
Telephone:  (905) 477-3065, Ext 7233
Website:  https://www.excocorp.com 
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Exco Technologies Limited to Present at Sidoti Virtual Investor Conference March 23-24

Exco Technologies Limited (TSX-XTC, OTCQX-EXCOF), a global supplier of innovative technologies servicing the die-cast, extrusion and automotive industries announced Darren Kirk, President and CEO, and Matthew Posno, CFO will present and host one-on-one meetings with investors at the Sidoti Spring Virtual Investor Conference, taking place on March 23-24, 2022.

The presentation will begin at 3:15pmET on March 23, 2022 and can be accessed live here: https://sidoti.zoom.us/webinar/register/WN_Setdu6a1QPu4VfzzcURCow

Exco will also host virtual one-on-one meetings with investors on Wednesday and Thursday, March 23 and 24, 2022. To register for the presentation or one-on-ones, visit www.sidoti.com/events. Registration is free and you don’t need to be a Sidoti client.

About Exco

Exco Technologies Limited is a global supplier of innovative technologies servicing the die-cast, extrusion and automotive industries. Our various businesses directly support the electric vehicle revolution and contribute positively to global sustainability goals. Through our 16 strategic locations in 7 countries, we employ about 4,900 people and service a diverse and broad customer base.

About Sidoti & Company

For over two decades, Sidoti & Company (http://www.sidoti.com) has been a premier provider of independent securities research focused specifically on small and microcap companies and the institutions that invest in their securities, with most of its coverage in the $100 million-$5 billion market cap range. The firm’s approach affords companies and institutional clients a combination of high-quality research, a small- and microcap-focused nationwide sales effort, broad access to corporate management teams, and extensive trading support. Sidoti serves 500+ institutional clients in North America.

Source:Exco Technologies Limited (TSX-XTC, OTCQX-EXCOF)
Contact:Darren Kirk, President and Chief Executive Officer
Telephone:(905) 477-3065 Ext. 7233
Website:https://www.excocorp.com
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Exco Technologies Limited Announces Normal Course Issuer Bid

ORONTO, Feb. 15, 2022 (GLOBE NEWSWIRE) — Exco Technologies Limited (TSX: XTC) (“Exco” or the “Company”) today announced that the Toronto Stock Exchange (“TSX”) has approved the Company’s normal course issuer bid (“NCIB”). Under the NCIB, Exco has the right to purchase for cancellation, from February 18, 2022 to February 17, 2023, a maximum of 1,955,000 common shares, representing approximately 10% of the 19,646,779 shares forming Exco’s public float as at February 15, 2022. As of February 15, 2022, Exco had 39,097,497 common shares issued and outstanding.

Any shares purchased by Exco under the NCIB will be effected through the facilities of TSX as well as on alternative Canadian trading systems, at prevailing market rates and any common shares purchased by the Company will be cancelled. The actual number of shares that may be purchased and the timing of any such purchases will be determined by Exco. Any purchases made by Exco pursuant to the NCIB will be made in accordance with the rules and policies of the TSX.

During the most recently-completed six months, the average daily trading volume for the common shares of Exco on the TSX was 34,568 shares. Consequently, under the policies of the TSX, Exco will have the right to repurchase under its NCIB, during any one trading day, a maximum of 8,642 shares, representing 25% of the average daily trading volume. In addition, Exco will be allowed to make, once per calendar week, a block purchase (as such term is defined in the TSX Company Manual) of shares not directly or indirectly owned by insiders of Exco, in accordance with the TSX policies. Exco will fund the purchases through available cash and/or bank facilities. Pursuant to a previous notice of intention to conduct a normal course issuer bid, under which Company sought and received approval from the TSX to purchase up to 1,960,000 common shares for the period of February 18, 2021 to February 17, 2022, the Company has purchased 200,000 common shares on the open market as of February 15, 2022 at a weighted average purchase price of $9.13 per common share.

Exco’s Board of Directors believes the underlying value of the Company may not be reflected in the market price of its common shares from time to time and that, at appropriate times, repurchasing its shares through the NCIB may represent a good use of Exco’s financial resources, as such action can protect and enhance shareholder value when opportunities or volatility arise. Thus, the Board has determined that the NCIB is in the best interest of the Company and its shareholders.

Exco Technologies Limited is a global supplier of innovative technologies servicing the die-cast, extrusion and automotive industries.  Through our 16 strategic locations in 7 countries, we employ 4,700 people and service a diverse and broad customer base.

Source: Exco Technologies Limited (TSX-XTC)
Contact:Darren Kirk, President and Chief Executive Officer
Telephone:(905) 477-3065 ext. 7233
Website: https://www.excocorp.com
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Small Cap Growth Company Investor Presentations Now Available for On-Demand Viewing

Company Executives share vision and answer questions live at VirtualInvestorConferences.com

February 07, 2022 08:35 ET | Source: Virtual Investor Conferences

NEW YORK, Feb. 07, 2022 (GLOBE NEWSWIRE) — Virtual Investor Conferences, the leading proprietary investor conference series, today announced the presentations from the February 2nd & 3rd Small Cap Growth Conference are available for on-demand viewing.

REGISTER OR LOGIN NOW AT: https://bit.ly/3HvCEMa

The company presentations will be available 24/7 for 90 days. Investors, advisors, and analysts may download shareholder materials from the company’s “virtual trade booth”.

February 2nd & 3rd Presentations:

PresentationTicker(s)
 Keynote Presentation from Skyline Corporate Communications Group

 “Social Media & the New Investor Relations Landscape”
 BlueRush Inc. (OTCQB: BTVRF | TSX-V: BTV)
 Ilika PLC (OTCQX: ILIKF | AIM: IKA)
 Prostar Holdings Inc. (OTCQX: MAPPF | TSX-V: MAPS)
 Solution Financial Inc. (OTCQX: SLNFF | TSX: SFI)
 AAC Clyde Space (OTCQX: ACCMF | Nasdaq Stockholm: AAC)
 Mission Ready Solutions Inc. (OTCQX: MSNVF | TSX-V: MRS)
 Legion Capital Corp. (OTCQB: LGCP)
 Wishpond Technologies Ltd. (OTCQX: WPNDF | TSX-V: WISH)
 Exco Technologies Ltd. (OTCQX: EXCOF | TSX: XTC)
 Magnis Energy Technologies Ltd (OTCQX: MNSEF | ASX: MNS)
 Flyht Aerospace Solutions, Ltd. (OTCQX: FLYLF | TSX-V: FLY)
 GlobalBlock Digital Asset Trading Ltd. (Pink: BLVDF | TSX-V: BLOK)
 Brainchip Holdings Ltd. (OTCQX: BRCHF | ASX: BRN)
 MBH Corporation plc (OTCQX: MBHCF | Deutsche Borse: M8H)
 NutraLife Biosciences, Inc. (Pink: NLBS)
 iFabric Corp. (OTCQX: IFABF | TSX: IFA)
 Alvopetro Energy Ltd. (OTCQX: ALVOF | TSX-V: ALV)
 Imperial Helium Corp. (OTCQB: IMPHF | TSX-V: IHC)
 InPlay Oil Corp. (OTCQX: IPOOF | TSX: IPO)
 Northstar Clean Technologies Inc. (OTCQB: ROOOF | TSX-V: ROOF)
 TAAL Distributed Information Technologies Inc. (OTCQX: TAALF | CSE: TAAL)
 Venzee Technologies Inc. (OTCQB: VENZF | TSX-V: VENZ)

To facilitate investor relations scheduling and to view a complete calendar of Virtual Investor Conferences, please visit 
www.virtualinvestorconferences.com.

About Virtual Investor Conferences®

Virtual Investor Conferences (VIC) is the leading proprietary investor conference series that provides an interactive forum for publicly traded companies to seamlessly present directly to investors.

Providing a real-time investor engagement solution, VIC is specifically designed to offer companies more efficient investor access. Replicating the components of an on-site investor conference, VIC offers companies enhanced capabilities to connect with investors, schedule targeted one-on-one meetings and enhance their presentations with dynamic video content. Accelerating the next level of investor engagement, Virtual Investor Conferences delivers leading investor communications to a global network of retail and institutional investors.

SOURCE: VirtualInvestorConferences.com

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Exco Results for First Quarter Ended December 31, 2021

  • Consolidated Sales of $101.0 million and EBITDA of $9.3 million
  • Net Income of $2.7 million and EPS of $0.07
  • Quarterly dividend raised 5% to $0.105 per common share
  • Financial position and liquidity remain strong with $11.6 million net cash

TORONTO, Feb. 01, 2022 (GLOBE NEWSWIRE) — Exco Technologies Limited (TSX-XTC, OTCQX-EXCOF) today announced results for its first quarter of fiscal 2022 ended December 31, 2021. In addition, Exco announced a 5% increase in its quarterly dividend to $0.105 per common share which will be paid on March 31, 2022 to shareholders of record on March 17, 2022. The dividend is an “eligible dividend” in accordance with the Income Tax Act of Canada.

“Exco’s results were well below potential this quarter due to widespread supply chain challenges, including constrained vehicle production arising from the global shortage of semiconductors,” said Darren Kirk, Exco’s President and CEO. “We are nonetheless very confident that our performance will rebound strongly through the balance of fiscal 2022 and into the years ahead supporting our Board’s decision to increase our dividend for the 13th consecutive year,” added Kirk.  

Consolidated sales for the first quarter ended December 31, 2021 were $101.0 million compared to $121.4 million in the same quarter last year – an decrease of $20.4 million or 17%. The impact of a strengthening Canadian dollar compared to the USD and Euro was $3.5 million in the quarter.

The Automotive Solutions segment reported sales of $55.2 million in the first quarter – a decrease of $20.9 million, or 27% from the same quarter last year. Adjusting for the negative impact of foreign exchange movements, sales decreased 24%. This decline was primarily driven by a 20% reduction in vehicle production volumes of North America and Europe. Despite healthy underlying consumer demand for vehicles, OEM production has remained constrained by COVID-19 related supply chain disruptions, including a shortage of semiconductor chips in particular. Exco’s results were additionally affected during the quarter by unfavorable vehicle and product mix shifts, inventory destocking as well as operational and logistical constraints, which hindered the production and shipment of certain products. Partially offsetting these factors were initial sales from the launch of new programs for both new and existing products. Looking forward, OEM vehicle production volumes are expected to increase in calendar 2022 as the semiconductor chip availability appears to have stabilized and we expect it to improve slowly throughout the calendar year. Exco will also benefit from ongoing new sizeable program launches as well as customers re-stocking inventory levels throughout their various channels. Quoting opportunities are increasing for new potential programs across the segment’s various businesses, which is expected to support future growth over market trend levels.

The Casting and Extrusion segment reported sales of $45.8 million in the quarter – an increase of $0.5 million, from the same period last year. Excluding the $1.1 million negative impact of foreign exchange, sales increased 4% compared to the prior year quarter. The Extrusion group experienced higher sales reflecting demand for extrusion tools particularly in the building and construction, large truck, recreational vehicle, and green energy sectors. Strong demand, combined with operational improvements, which have continued to reduce lead times, have contributed to market share gains in the Extrusion group providing above market growth. The Castool group’s revenues were down slightly as demand for die-cast consumable tooling from automotive customers declined due to reduced vehicle production volumes. This decline was partially offset by increased demand for extrusion capital equipment during the quarter. Castool continues to invest heavily and advance its proprietary tooling solutions which are increasingly required by customers as their manufactured components increase in size and complexity and as they focus on improving their own productivity and efficiency. The Large Mould group sales were down during the quarter due to the same supply chain disruptions caused by the semi-conductor shortage negatively impacting vehicle production, requiring less rebuild work for moulds. The Large Mould group quoted and was awarded a number of programs from current and new customers in the quarter; as a result, inventories and backlog continue to grow. This is particularly the case with the group’s world leading additive manufacturing business which realized record revenues and order inflow during the quarter while making sizeable inroads with new customers. Looking forward, quoting activity within all groups in this segment is strong and revenues will benefit as automotive production rebounds and awarded programs ramp up.

Consolidated net income for the first quarter was $2.7 million or basic and diluted earnings of $0.07 per share compared to $10.9 million or $0.28 per share in the same quarter last year. The consolidated effective income tax rate for the current quarter was 26% compared to 22% the prior year period. The income tax rate in the current year quarter was impacted by geographic distribution and foreign rate differentials.

The Automotive Solutions segment reported pretax profit of $3.4 million in the quarter – a decrease of $8.2 million over the same quarter last year. The segment’s lower pretax profit is due to the 24% reduction in sales, lower overhead absorption, and higher material, logistics and labour costs. The semi-conductor shortage disrupted OEM production which caused significant inefficiencies to our operations. Last minute cancellation of releases were common, or conversely, certain customers have accelerated releases with little notice. This caused our operations to work overtime and incur expedited shipping costs. These production and shipping challenges created inefficiencies that increased overhead and direct labour costs during the quarter which were exacerbated by reduced labour availability due to the increased prevalence of COVID-19. Furthermore, the segment incurred severance costs as lower demand for some products required reorganization of labour. Management remains focused on improving the efficiency of its operations and reducing its overall cost structure. Pricing discipline remains a focus and action is being taken on current programs where possible, though there is typically a lag of a few quarters before the impact is realized. As well, new program awards are priced to reflect management’s expectations for higher future costs.

The Casting and Extrusion segment reported $1.9 million of pretax profit in the quarter – a decrease of $2.6 million from the same quarter last year. The Extrusion group’s profits benefited from a balanced sales performance across all locations. Higher sales in this group combined with production improvements and increased absorption of overheads provided efficiency benefits to counter higher raw material costs and other inflationary impacts. In particular, our harmonized manufacturing process across the group’s facilities has allowed us to centralize certain functions such as programming and design and utilize our capacity on a network basis in order to achieve these results. The Castool group profits were negatively impacted by inflationary pressures on raw materials, unfavorable product mix shifts, lower overhead absorption, higher depreciation costs and start-up costs of Castool Morocco, which only began to realize revenue late in the quarter. Although the Large Mould Group’s quoting activity and new business awards were very strong in the quarter, actual shipments of tools were dampened due to reduced global vehicle production and consequently lower mould rebuild work. Reduced labour availability also negatively impacted the results of all three segment business units as measures were taken to reduce the spread of COVID-19. Management remains focused on taking pricing action where possible to preserve margins, reducing its overall cost structure and improving manufacturing efficiencies. Such activities together with sales efforts are expected to improve segment profitability in future quarters.

During the first quarter, the Company signed a definitive agreement to acquire the extrusion dies business of Halex Holdings GmbH (“Halex® Extrusion Dies”). Halex Extrusion Dies was founded in 1990 and operates four key manufacturing locations – two in Germany and two in the northern industrial region of Italy. The company is the second largest manufacturer of aluminium extrusion dies in Europe and the continent’s leading supplier of complex extrusion dies. Halex will complement Exco’s six existing extrusion die operations, located in Canada, USA (2), Mexico, Colombia and Brazil. The acquisition will provide Exco with well-established and high-quality operations, manufacturing complex extrusion dies in Europe and will provide better support for the Company’s global customers.

The transaction is expected to close in the spring of 2022 and is valued at €40 million (C$58 million equivalent) on an enterprise value basis. It will be funded with a combination of cash on hand and available bank lines. Halex will add almost €40 million in annual sales and is expected to be immediately accretive to Exco’s earnings per share. Exco will report the results of Halex within its Casting and Extrusion segment.

The Corporate segment expenses were $1.6 million in the quarter compared to $2.2 million in the prior year quarter. Corporate expenses improved primarily due to higher foreign exchange losses incurred in the prior year quarter. Consolidated EBITDA for the first quarter totaled $9.3 million compared to $19.3 million in the same quarter last year. EBITDA as a percentage of sales decreased to 9.3% in the current quarter compared to 15.9% the prior year. The EBITDA margin in the Casting and Extrusion segment was 13.0% compared to 18.0% last year while the EBITDA margin in the Automotive Solutions segment was 9.0% compared to 17.5% last year.

Exco generated cash from operating activities of $8.0 million during the quarter and $5.2 million of Free Cash Flow after $2.8 million in Maintenance Fixed Asset Additions. This cash flow, together with cash on hand was more than sufficient to fund fixed assets for growth initiatives of $8.2 million and $3.9 million of dividends. Exco ended the year with $11.6 million in net cash and $61.6 million in available liquidity, including $26.3 million of balance sheet cash, continuing its practice of maintaining a very strong balance sheet and liquidity position.

Outlook

Despite current macro challenges, the overall outlook is very favorable across Exco’s various businesses into the medium term. Consumer demand for automotive vehicles is currently outstripping supply in most markets, which are constrained by a shortage of microchips and, to a lesser extent, other raw materials, components and availability of labour. Dealer inventory levels are near record lows, while average transaction prices for both new and used vehicles are at record highs and the average age of the broader fleet has continued to increase to an all-time high. This bodes well for higher levels of future vehicle production and the sales opportunity of Exco’s various automotive components and accessories once supply chains normalize. In addition, OEM’s are increasingly looking to the sale of higher margin accessory products as a means to enhance their own levels of profitability. Exco’s Automotive Solutions segment derives a significant amount of activity from such products and is a leader in the prototyping, development and marketing of the same. Moreover, the rapid movement towards an electrified fleet for both passenger and commercial vehicles is enticing new market entrants into the automotive market while causing traditional OEM incumbents to further differentiate their product offerings, all of which is driving above average opportunities for Exco.

With respect to Exco’s Casting and Extrusion segment, the intensifying global focus on environmental sustainability is creating significant growth drivers that are expected to persist through at least the next decade. Automotive OEMs are looking to light-weight metals such as aluminum to reduce vehicle weight and reduce carbon dioxide emissions. This trend is evident regardless of powertrain design – whether internal combustion engines, electric vehicles or hybrids. As well, a renewed focus on the efficiency of OEMs in their own manufacturing process is creating higher demand for advanced tooling that can contribute towards their profitability and sustainability goals. Certain new EV manufacturers have adopted the approach of utilizing much larger die cast machines to cast entire sub-frames of vehicles out of an aluminum based alloy rather than assemble numerous pieces of separately stamped and welded pieces of ferrous metal. Exco expects traditional OEMs will ultimately follow this trend and is positioning its operations to capitalize accordingly. Beyond the automotive industry, Exco’s extrusion tooling supports diverse end markets which are also seeing increased demand for aluminum driven by environmental trends, including energy efficient buildings, solar panels, etc.

On the cost side, inflationary pressures have intensified in recent quarters while prompt availability of various input materials, components and labour has become more challenging. We are offsetting these dynamics through various efficiency initiatives and taking pricing action where possible although there is typically several quarters of lag before the counter measures are evident.

Exco itself is also looking inwards with respect to ESG and sustainability trends to ensure its own operations are sustainable. We are investing significant capital to improve the efficiency and capacity of our own operations while lowering our own carbon footprint. In the current quarter we released our first Sustainability Report on our corporate website and we will update this over time.

Over the next 5 years Exco is currently targeting an organic compounded average annual growth rate of approximately 10% for revenues and slightly higher levels for EBITDA and Net Income during this timeframe, producing an annual EPS of roughly $1.90 in fiscal 2026. This target is expected to be achieved through the launch of new programs, general market growth, and also market share gains consistent with the Company’s operating history. Capital investments will remain elevated in the next few years in order to position the Company for the significant growth opportunities we see. Capital expenditures are expected to exceed $55 million for fiscal 2022.

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

Non-IFRS Measures:  In this News Release, reference may be made to EBITDA, EBITDA Margin, Pretax Profit, Free Cash Flow and Maintenance Fixed Asset Additions which are not measures of financial performance under International Financial Reporting Standards (“IFRS”). Exco calculates EBITDA as earnings before interest, taxes, depreciation, amortization and other expenses and EBITDA Margin as EBITDA divided by sales. Exco calculates Pretax Profit as segmented earnings before other income/expense, interest and taxes.  Free Cash is calculated as cash provided by operating activities less interest paid and Maintenance Fixed Asset Additions. Maintenance Fixed Asset Additions represents investment in fixed assets that are required to continue current capacity levels. EBITDA, EBITDA Margin, Pretax Profit and Free Cash Flow are used by management, from time to time, to facilitate period-to-period operating comparisons and we believe some investors and analysts use these measures as well when evaluating Exco’s financial performance. These measures, as calculated by Exco, do not have any standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other issuers. 

Quarterly Conference Call: February 2, 2022 10:00 a.m.(Toronto time)

To access the live audio webcast, please log on to www.excocorp.com, or https://edge.media-server.com/mmc/p/s4962zix a few minutes before the event.  The conference call can be accessed by dialing toll free at (866) 572-8261 or internationally at (703) 736-7448. The conference ID is 4594530.

For those unable to participate on February 2, 2022, an archived version will be available on the Exco website.

 Source:Exco Technologies Limited (TSX-XTC, OTCQX-EXCOF)
 Contact:Darren Kirk, President and Chief Executive Officer
 Telephone:(905) 477-3065 Ext. 7233
 Website:https://www.excocorp.com

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 7 countries, we employ about 4,700 people and service a diverse and broad customer base.

Notice To Reader: Forward Looking Statements

This press release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. We may use words such as “anticipate”, “may”, “will”, “should”, “expect”, “believe”, “estimate”, “5-year target” and similar expressions to identify forward-looking information and statements especially with respect to growth, outlook 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, liquidity, operating efficiencies, improvements in, expansion of and/or guidance or outlook as to future revenue, sales, production sales, margin, earnings, earnings per share, including the outlook for 2026, are forward-looking statements. 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. These forward-looking statements are based on our plans, intentions or expectations which are based on, among other things, the current improving global economic recovery from the COVID-19 pandemic and containment of any future or similar outbreak of epidemic, pandemic, or contagious diseases that may emerge in the human population, which may have a material effect on how we and our customers operate our businesses and the duration and extent to which this will impact our future operating results, assumptions about the number of automobiles produced in North America and Europe, production mix between passenger cars and trucks, 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 in response to rising climate risks, raw material prices, supply disruptions, economic conditions, inflation, currency fluctuations, trade restrictions, our ability to integrate acquisitions, our ability to continue increasing market share, or launch of new programs and the rate at which our current and future greenfield operations in Mexico and Morocco achieve sustained profitability. Readers are cautioned not to place undue reliance on forward-looking statements throughout this document and are also cautioned that the foregoing list of important factors is not exhaustive. 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. 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 or www.excocorp.com.