Exco Technologies Limited - Fourth Quarter ended September 30, 2010 - Quarterly Dividend Declared
TORONTO, Nov. 25 /CNW/ - Exco Technologies Limited (TSX-XTC) today announced results for its fourth quarter ended September 30, 2010. In addition, the Company announced that its quarterly cash dividend will be increased 25% to $0.025 per share and will be paid December 23, 2010 to shareholders of record on December 15, 2010. The dividend is an "eligible dividend" in accordance with the Income Tax Act of Canada.
In the fourth quarter sales were $45.9 million - a $8.2 million or 21.8% increase over $37.7 million in the prior year. This marks the continuation of an improving sales trend which has seen sales improve for four consecutive quarters. The Casting and Extrusion segment recorded higher sales of $30.1 million compared to $26.0 million last year - an increase of over 15%. This is mostly attributable to strong sales in the final months of the quarter by the large mould group. Castool sales were largely consistent with last year and extrusion tooling sales, although lower than last year, only slightly offset the segments overall increase. The Automotive Solutions segment experienced a 36% increase in sales from $11.7 million last year to $15.9 million this year despite the closure of Neocon USA which had sales of $ 1.8 million last year. Sales advanced at all three business units in this segment although the bulk of the activity was at Neocon and Polytech.
The Company reported fourth quarter net income of $2.4 million compared to net income of $364 thousand in fiscal 2009. The sales advance has been primarily responsible for improving overhead absorption at both the Automotive Solutions and the Casting and Extrusion segments. Earnings improvement took place mostly in the Automotive Solutions segment where pretax earnings increased by $1.7 million to $1.1 million for the quarter compared to a segment loss of $631 thousand last year. This segment experienced a combination of improving production volumes on existing programs and considerable new program launches by Neocon and Polytech in particular. The Casting and Extrusion segment also advanced earnings by $1 million in the quarter to $2.5 million for the quarter compared to $1.5 million last year. The increase in earnings in this segment was principally driven by the large mould business which is adapting to meet aggressive demand by OEM and Tier 1 customers for powertrain moulds and maintenance. Earnings were, however, impacted by start up losses at the new large mould maintenance facility in Queretaro, Mexico and production inefficiencies associated with the closure of the Aludie extrusion die plant in Newmarket, Ontario.
Gross margin in the quarter was 23.3% compared to 20.7% last year reflecting the impact of lower costs this year end and better overhead absorption associated with higher sales. The quarter's gross margin was, however, impacted by delivery of several large moulds requiring higher than anticipated production costs that were not recoverable from customers. Exco continues to have no bank debt and closed the year with cash deposits of $20.2 million compared to cash deposits of $11.4 million last year.
During the fourth quarter the Company continued experiencing the sales and earnings momentum that has been consistently building throughout the year. With both automotive tooling and component sales convincingly recovering in North America, the Company's earnings and cash position should continue to grow. During the upcoming year, Exco's investment in Queretaro Mexico, its consolidation of the extrusion tooling plants and its acquisition of Allper AG in Switzerland in October should also bear fruit. This positive business outlook coupled with Exco's debt free situation underlies the Board's decision to increase the Company's dividend this quarter by 25% to $0.025 per share.
"While 2009 was certainly an extraordinary year which I was pleased to see end, 2010 has been remarkably strong at most of our businesses," said Brian Robbins, President and CEO of Exco. "We are sufficiently comfortable with the Company's business prospects to increase the dividend at this time even as we continue to focus on our underperforming Polydesign and extrusion tooling businesses which should join our other businesses in contributing more in the year ahead."
(For further information and prior year comparison please refer to the Company's Fourth Quarter Interim Financial Statements in the Investor Relations section posted at www.excocorp.com. Alternatively, please refer to www.sedar.com after November 26, 2010.)
Exco Technologies Limited is a global supplier of innovative technologies servicing the die-cast, extrusion and automotive industries. Through our 10 strategic locations, we employ 1,796 people and service a diverse and broad customer base.
Management will hold a conference call to discuss the fourth quarter results on Friday November 26, 2010 at 1:30 pm (Toronto Time). The local dial in number for the call is (647) 427-7450 or toll free 1-888-231-8191. To access the live audio webcast, please log on to www.excocorp.com, www.q1234.com or http://www.newswire.ca/en/webcast/viewEvent.cgi?EventID=3318920 a few minutes before the event. Real Player is required for access. For those unable to participate on November 26, 2010, an archived version will be available on the Exco website.
This news release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. We use words such as "anticipate", "plan", "may", "will", "should", "expect", "believe", "estimate" and similar expressions to identify forward-looking information and statements. Such forward-looking information and statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe to be relevant and appropriate in the circumstances. Readers are cautioned not to place undue reliance on forward-looking information and statements, as there can be no assurance that the assumptions, plans, intentions or expectations upon which such statements are based will occur. Forward-looking information and statements are subject to known and unknown risks, uncertainties, assumptions and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed, implied or anticipated by such information and statements. These risks, uncertainties and assumptions are described in the Company's Management's Discussion and Analysis included in our 2009 Annual Report, in our 2009 Annual Information Form and, from time to time, in other reports and filings made by the Company with securities regulatory authorities.
While the Company believes that the expectations expressed by such forward-looking information and statements are reasonable, there can be no assurance that such expectations and assumptions will prove to 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 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.
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