Exco Technologies Limited (TSX-XTC, OTCQX-EXCOF)
today announced results for its fourth quarter and year ended
September 30, 2021. In addition, the Company announced the
quarterly dividend of $0.10 per common share which will be paid on
December 31, 2021 to shareholders of record on December 17, 2021.
The dividend is an “eligible dividend” in accordance with the
Income Tax Act of Canada.
|
Three Monthsended September 30 |
Twelve Monthsended September 30 |
|
(in $ millions except per share amounts) |
|
2021 |
2020 |
2021 |
2020 |
Sales |
$106.4 |
$100.7 |
$461.2 |
$412.3 |
Net income for the period |
$7.1 |
$10.7 |
$38.4 |
$27.4 |
Diluted earnings per share
from net income |
|
|
|
|
Reported |
$0.18 |
$0.27 |
$0.98 |
$0.69 |
Cash dividend paid per
share |
$0.10 |
$0.095 |
$0.40 |
$0.38 |
EBITDA |
$15.3 |
$15.8 |
$70.1 |
$53.5 |
"Exco completed the final quarter of fiscal 2021 with relatively
strong results despite a very challenging environment,” said Darren
Kirk, Exco’s President and CEO. “We expect to build on this
momentum in the year ahead as industry conditions normalize and
recent program launches are fully ramped up. Longer term, our
businesses will experience a continuing tailwind from the electric
vehicle revolution and worldwide movement towards reducing
emissions.”
Fourth quarter consolidated sales were $106.4 million – an
increase of $5.7 million or 6% from the prior year. During the
quarter, exchange rate movements decreased sales by $5.0
million.
The Automotive Solutions segment experienced a
7% decrease in sales, or a reduction of $4.4 million, to $56.8
million from $61.2 million in the fourth quarter of 2020. Excluding
the impact of foreign exchange, segment sales decreased $1.4
million or 2%. The sales decline was driven by materially lower
vehicle production volumes in both North America and Europe due to
supply chain disruptions including semiconductor chip shortages and
logistical constraints. North American vehicle production was down
25% during the quarter compared to a year ago and European vehicle
production was down about 30%. The segment’s very modest top line
decline in the context of this environment reflects the benefits of
sizeable new program launches and favorable product mix,
particularly at the segment’s Polytech and Neocon operations.
Looking forward, OEM vehicle production volumes are expected to
increase as the semiconductor chip availability improves. Exco will
benefit from this development as well as the restocking of certain
accessory products and higher volumes arising from new/ recent
program launches. Quoting activity remains encouraging and we see
ample opportunity to maintain our longer-term trend of increasing
our content per vehicle across our portfolio of businesses.
The Casting and Extrusion segment recorded sales
of $49.6 million in the fourth quarter compared to $39.5 million
last year – an increase of $10.1 million or 26%. Excluding the
negative impact of foreign exchange movements, the segment’s sales
were up 31% for the quarter. The Extrusion group experienced higher
sales at all locations, reflecting pricing action, increased demand
for extrusion tools across all industry segments and operational
improvements that have continued to reduce lead times contributing
to market share gains. The Castool group’s revenues were higher for
the quarter as demand for die-cast consumable tooling and extrusion
products was solid, with a slightly stronger demand for the
die-cast consumable tooling solutions leading the quarter. Castool
growth was driven by increasing electric vehicle production which
compensated for lower overall industry vehicle production. Castool
continues to invest in new equipment 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 up 34% from the prior year quarter
with a mixture of new tools, die rebuilds and solid additive sales
representing key drivers of the results. New business from current
and new customers was awarded in the quarter; as a result,
inventories and backlog continue to grow. Looking forward, quoting
activity within all groups in this segment is strong and will
benefit as automotive production rebounds.
The Company’s fourth quarter consolidated net
income decreased to $7.1 million or earnings of $0.18 per share
compared to $10.7 million or earnings of $0.27 per share in the
same quarter last year – an EPS decrease of 33%. The effective
income tax rate was 27% in the current quarter compared to negative
3% in the same quarter last year. The effective tax rate in the
current period reflects the impact of non-taxable expenses in
foreign jurisdictions and the payment of franchise and state taxes.
The tax rate in the prior year quarter reflects the reversal of
$2.3 million of deferred tax liabilities from resolved tax
exposures and $0.3 million of R&D tax credits net of certain
foreign tax adjustments. Excluding these items, the effective tax
rate was 22% in the prior year quarter.
Fourth quarter pre-tax earnings in the
Automotive Solutions segment totalled $4.5 million, a decrease of
$2.8 million or 38% over the same quarter last year. Included in
the prior year quarter was COVID-19 wage subsidies of $1.3 million.
Current period profitability was negatively impacted by lower sales
volumes and higher costs associated with the semiconductor
shortage, which negatively impacted our ability to manage
operations efficiently. In particular, order flow across most
products was erratic as OEMs constantly reshuffled their own
production schedules while our labour other overhead items were
geared to a higher level of sales. As well, logistical challenges
created increased expedite charges in some cases, we faced raw
material cost inflation and also incurred severance costs.
Management is optimistic that its overall cost structure will
return to relatively normal levels in future quarters as scheduling
and predictability improves with strengthening volumes.
Pre-tax earnings in the Casting and Extrusion
segment improved by $1.7 million or 40% over the same quarter last
year to $5.9 million. Excluding $2.7 million in COVID-19 subsidies
received last year, segment profitability improved by $4.4 million.
The earnings improvement was mainly driven by increased
contributions from the Extrusion group. This group benefited from
higher volumes and prices. Direct labour as a function of sales
improved and fixed overheads were better absorbed. While higher
sales at the Castool and Large Mould groups also positively
impacted segment profitability, this benefit was countered by
rising raw material prices, cost overruns with certain programs
near completion and initial expenses for Castool’s new plant in
Morocco.
The Corporate segment in the fourth quarter
recorded expenses of $0.7 million compared to $1.1 million last
year mainly due to foreign exchange gains in the current quarter
compared to losses in the prior year period, partially offset by
higher compensation expenses incurred in the current quarter. As a
result of the foregoing, consolidated EBITDA in the quarter was
$15.3 million (14.4% of sales) compared to $15.8 million (15.7% of
sales) last year.
Exco generated cash from operating activities of
$7.3 million during the quarter and $3.2 million of Free Cash Flow
after $4.0 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 $7.7 million and $3.8
million of dividends. For the year, Exco generated Free Cash Flow
of $37.3 million and returned $15.5 million to shareholders through
dividend payments. Exco ended the year with $18.6 million in net
cash and $68.6 million in available liquidity, including $24.1
million of balance sheet cash, continuing its practice of
maintaining a very strong balance sheet and liquidity position.
For further information and prior year
comparison please refer to the Company’s Fourth Quarter Condensed
Financial Statements in the Investor Relations section posted at
www.excocorp.com. Alternatively, please refer to www.sedar.com.
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. Given the Company’s elevated planned capital
spending on fixed assets for growth initiatives (including
additional Greenfield locations, energy efficient heat treatment
equipment and increased capacity) through the near term, the
Company has modified its calculation of Free Cash Flow. This change
is meant to enable investors to better gauge the amount of
generated cash flow that is available for these investments as well
as acquisitions and/or returns to shareholders in the form of
dividends or share buyback programs.
Quarterly Conference Call: December 2, 2021
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/n8go7q8w 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 5082034.
For those unable to participate on December 2,
2021, 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: |
http://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 4,900 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.
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