- Sales up over 6% in the quarter
- AFX acquisition completed
- Financial position and liquidity remains strong
- South African operation closed
TORONTO, April 27, 2016 /CNW/ - Exco Technologies
Limited (TSX-XTC) today announced results for its second
quarter ended March 31, 2016. In
addition, the Company announced the quarterly dividend of
$0.07 per common share which will be
paid on June 30, 2016 to shareholders
of record on June 15,
2016. The dividend is an "eligible dividend" in
accordance with the Income Tax Act of Canada.
|
Three Months Ended
March 31
|
Six Months
Ended March 31
|
(in $ thousands
except per share amounts)
|
|
|
|
|
|
2016
|
2015
|
2016
|
2015
|
Sales
|
$133,383
|
$125,484
|
$264,284
|
$245,381
|
Net income
|
$8,989
|
$10,872
|
$20,817
|
$20,510
|
Basic earnings per
share
|
$0.21
|
$0.26
|
$0.49
|
$0.49
|
Diluted earnings per
share
|
$0.21
|
$0.26
|
$0.49
|
$0.48
|
Common shares
outstanding
|
42,508,130
|
42,337,862
|
42,508,130
|
42,337,862
|
Consolidated sales for the second fiscal quarter ended
March 31, 2016 were $133.4 million compared to $125.5 million last year – an increase of
$7.9 million or 6%. Year-to-date
sales were up by $18.9 million or 8%.
The materially weaker average Canadian dollar exchange rate in the
second quarter compared to last year accounted for $6.8 million and $17.1
million of the consolidated sales growth in the quarter and
year-to-date periods respectively.
The Automotive Solutions segment reported higher sales of
$86.3 million in the second quarter –
an increase of $9.6 million or 13%
from the same quarter last year. Year-to-date, it reported sales of
$164.0 million – an increase of
$14.9 million or 10% over last year.
This reflects higher vehicle production volumes and also market
share gains with new product launches at Polydesign in Morocco which services the European market
experiencing the strongest growth of the segment's businesses.
The Casting and Extrusion segment reported sales of $47.1 million in the quarter – a slight decrease
of $1.7 million or 4% from the same
quarter last year. Year-to-date, the segment reported sales of
$100 million – an increase of
$4.1 million or 4% over last year.
This reflected lower demand for moulds in the quarter in the large
mould business on certain established engine programs and increased
production of moulds for new programs with inherent product launch
inefficiencies. Also operational challenges from the
installation of new machinery associated with the sizeable capex
project at our Newmarket large
mould facility also had an adverse impact on productivity. This may
continue for an additional quarter but thereafter sales should
resume their normal trajectory as the order backlog is very strong
and the large mould business continues to be awarded new
business. Sales at our Extrusion and Castool groups, however,
were higher in the quarter and year-to-date.
Consolidated net income for the second quarter was $9 million or basic earnings of $0.21 per share compared to $10.9 million or $0.26 per share of basic earnings in the same
quarter last year – a decrease of 17%. Consolidated net income
year-to-date was up slightly at $20.8
million or basic earnings of $0.49 per share compared to $20.5 million or $0.49 per share in the prior year. Earnings in
the quarter were adversely impacted by several factors. First,
lower sales volumes and reduced profitability within the Casting
and Extrusion segment as described above impacted earnings. Second,
about $1 million of foreign exchange
translation loss compared to a similar sized gain in the prior year
quarter eroded earnings by $0.03 per
share when comparing year over year results. Last, approximately
$1 million of transaction-related
costs (year-to-date $1.3 million)
associated with the acquisition of AFX Industries LLC reduced
earnings by $0.03 per share in both
the quarter and year-to-date periods. The AFX acquisition closed on
April 4, 2016.
The Automotive Solutions segment reported pretax profit of
$11.1 million in the second quarter –
an increase of $2.4 million or 28%
over the same quarter last year. Year-to-date the segment reported
pretax profit of $20.2 million – an
increase of $3.7 million or 22% over
the prior year period. The increase in the quarter and year-to-date
periods were driven by both higher sales and margin expansion
resulting from improved production efficiencies and better overhead
absorption. All businesses in this group contributed to the
segment's higher pretax profit with the exception of the ALC group
which closed its South African operations in the second quarter.
This led to slightly weaker ALC performance compared to last
year. Combined losses at ALC's South African and Lesotho operations amounted to $1.6 million in the quarter and $2.9 million year-to-date, representing
$0.04 per share and $0.07 per share respectively. The closure of the
South African operations is expected to substantially improve ALC's
operating results going forward.
The Casting and Extrusion segment reported lower pretax profit
of $5.1 million in the second quarter
– a decrease of $3.9 million or 43%
from the same quarter last year. Year-to-date the segment reported
pretax profit of $15.1 million or
$1.4 million below the prior year
period. Most of this reduction occurred in the large mould business
which had significantly lower absorption rates and was negatively
impacted by unfavorable mix variance and new product launch
inefficiencies in the second quarter. Lower quarterly earnings were
also experienced within the Extrusion die group but were offset by
a similar increase at the Castool group when comparing year over
year results. Helped by strong top line growth, combined
losses at our Brazilian and Thailand operations narrowed to $0.01 per share in the quarter from $0.02 per share in the prior year period while
year-to-date losses for these two operations remained constant at
$0.03 per share. Our Colombian
extrusion operations also improved in the quarter and year-to-date
with significant sales growth driving strong levels of
profitability compared to a modest loss position last year.
Earnings at our Texas extrusion
operation were adversely impacted by operational adjustments
following the move into a new facility at the start of the second
quarter.
The Corporate segment expense increased to $3.3 million in the second quarter from
$1.7 million in the prior year
quarter. Approximately $1 million of
this increase was due to transaction costs associated with the
acquisition of AFX with much of the remaining amount attributable
to adverse foreign exchange translation movements partially offset
by lower stock option expense. Year-to-date Corporate segment
expenses totaled $5.1 million
compared to $3.5 million last year
with essentially all of the difference occurring in the second
quarter. Once again, the combination of AFX transaction costs and
the foreign exchange translation swings led to reduced earnings per
share by $0.05 in the quarter and
$0.04 year-to-date in comparison to
the prior year periods.
During the quarter, the Company's quality and delivery
performance was recognized by numerous customers. Polytech
received, for the third consecutive year, the General Motors
Supplier Excellence Award. Neocon has been notified that Subaru
will award it a supplier excellence award and Polydesign has
achieved EcoVadis Gold Status for program sustainability with
Faurecia.
Despite heavy capital spending and the post-quarter acquisition
of AFX, the Company's pro-forma balance sheet remains strong. On
this basis its net debt position totaled approximately $60.0 million. Cashflow remained strong with net
cash provided by operating activities amounting to $12 million in the second quarter and
$29.2 million year-to-date compared
to $6.9 million and $5.0 million of cash in the same periods last
year. Capital spending year-to-date totals about two-thirds of our
$23.9 million in planned capital
expenditures for fiscal 2016. The balance of our remaining
capital spending will be partially offset by the recently announced
non-repayable contribution of up to $4.6
million from the Canadian Federal government, which
represents up to 50% of the costs for the Newmarket large mould facility capital
project. Exco's cashflow is also expected to benefit from the
conclusion of a commercial arbitration which the Company initiated
in 2015. As a result of this development, Exco expects to receive
approximately $3.5 million in the
third fiscal quarter of 2016.
The outlook for Exco over the rest of the year continues to be
fundamentally strong with foreign exchange, large mould product mix
and the implementation of several operational initiatives at
several of our business groups contributing to some variability in
both top and bottom line. The inclusion of the AFX business in
the third quarter and the discontinuance of ALC's South African
operations are also expected to add significantly to earnings going
forward.
(For further information and prior year comparison please refer
to the Company's Second Quarter Condensed Financial Statements in
the Investor Relations section posted at www.excocorp.com.
Alternatively, please refer to www.sedar.com)
Exco Technologies Limited is a global supplier of innovative
technologies servicing the die-cast, extrusion and automotive
industries. Through our 18 strategic locations in 10
countries, we employ 6,697 people and service a diverse and broad
customer base.
A conference call to discuss these results will be held on
Thursday, April 28, 2016 at
10:00 a.m. (Toronto time) which can be accessed by
dialling (647) 427-7450 for local (Toronto) calls or toll free at (888)
231-8191.
To access the live audio webcast, please log on to
www.excocorp.com, or
http://event.on24.com/r.htm?e=1168546&s=1&k=AB3461F364F6E8E33C9E0EBE084518ED
a few minutes before the event. The conference call can be
accessed by dialling (647) 427-7450 for local (Toronto) calls or toll free at (888)
231-8191.
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 this news
release. 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, weakening raw material prices, continuing economic
recovery, currency fluctuations which may in fact not occur and the
rate at which our new operations in Brazil, Thailand and South
Africa/Lesotho achieve
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 this Annual Report, our 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.
SOURCE Exco Technologies Limited