Second Quarter ended March 31, 2011 and Quarterly Dividend Declared
Toronto, May 4, 2010 - Exco Technologies Limited (TSX-XTC) today announced results for its second quarter ended March 31, 2011. In addition, the Company announced a $0.025 dividend per share which will be paid on June 30, 2011 to shareholders of record on June 15, 2011. The dividend is an “eligible dividend” in accordance with the Income Tax Act of Canada.
Consolidated sales for the second quarter ended March 31, 2011 were $52.9 million – an increase of $13.6 million or almost 35% over last year. Year-to-date sales were $98.5 million – an increase of $21.6 million or over 28% compared to last year. Strong underlying demand for our products has fuelled sales growth and mitigated the adverse impact of a climbing Canadian dollar. Sales growth was experienced throughout both our segments.
The Casting and Extrusion segment reported second quarter sales of $33.5 million – an increase of $9.1 million or over 37% compared to the same quarter last year. Year-to-date, it reported sales of $61.2 million compared to $48.4 million last year – an increase of $12.8 million or almost 27%. Within this segment the large mould group increased sales by 119% in the second quarter and 64% year-to-date compared to last year reflecting strong demand for powertrain tooling moulds. Sales at Castool increased both in the current quarter and year-to-date by 35% over last year once again reflecting strong demand for that division’s die cast and extrusion products. Castool’s sales this year also reflect the inclusion of sales from its recent acquisition of Allper AG in Europe.
Sales in the Automotive Solutions segment in the second quarter were $19.4 million – an increase of $4.5 million or almost 30% from the same quarter last year. Year-to-date, the segment reported sales of $37.2 compared to $28.5 million – an increase of $8.7 million or almost 31% compared to last year. Sales volumes at Polytech and Polydesign have improved significantly both in the current quarter (45% and 68% respectively) and year-to-date (37% and 69% respectively). This reflects recovering light vehicle production levels in North America and, to a lesser extent, in Europe and in the case of Polydesign the smooth launch of significant new cut and sew and instrument panel programs. Sales at Neocon have been consistently strong over the last year as market acceptance of the Neolux carpeted product continues to drive sales. Year-to-date sales at Neocon remain consistent with prior year and decreased slightly in the current quarter as the sales backlog experienced last year has now been cleared.
Consolidated net income for the second quarter was $5.5 million or $0.14 per share compared to consolidated net income of $2.2 million or $0.05 per share in the same quarter last year. Year-to-date, consolidated net income was $8.7 million or $0.21 per share compared to consolidated net income of $4.1 million or $0.10 per share last year.
The Automotive Solutions segment reported 190% higher segment income in the second quarter of $3.5 million compared to $1.2 million last year. Year-to-date pretax profit was also up 170% to $6.2 million compared to $2.3 million last year. Improving light vehicle production has significantly improved overhead absorption and, in the case of Neocon, the clearing of last year’s order backlog has allowed it, in the current quarter, to operate more profitably than last year. Successful cost cutting initiatives in recent years have positioned Polytech and Neocon for higher profitability in the current year despite unfavorable foreign exchange rates. Polydesign has returned to profitability in the current year with new product launches providing not only the necessary throughput but also higher added value than its traditional seat cover business.
Gross margin in the second quarter continued at record high levels. Increasing slightly in the quarter to 29.1% from 28.8% last year, Exco’s gross margin has not been this high since 2005. Year-to-date gross margin also increased slightly to 27.8% from 26.8% last year. Even so there is still room for improvement as production inefficiencies at Extrusion Canada arising from the consolidation of AluDie’s capacity impacted gross margin in the current year as did the negative gross margin at Edco and Excoeng Mexico. These situations should improve in the quarters to come with the consolidation process coming to a close and volumes improving at both Edco and Excoeng Mexico.
The Company continues to have a strong cash position at quarter end of $12.7 million or 31 cents per share and no bank debt despite having funded significantly higher working capital necessary to support the strong sales growth over the last several quarters.
The recent rise in oil prices and the Canadian dollar’s surge beyond US dollar parity have tended to increase raw material costs, in the former case, and lower revenue, in the latter case. However, Exco has largely mitigated the impact of these factors by a combination of developing alternate lower cost petroleum based raw material, raising prices where possible, plant closures in Canada and improving operating efficiencies in all of our production facilities.
Brian Robbins, President and CEO of Exco says “these results clearly show that the major structural changes to our global footprint and our focus on operating efficiencies over the last several years, although difficult and at times painful, are now enabling us to mitigate the effect of an ‘above par’ Canadian dollar and reap the benefit of recovering light vehicle production volumes”.
(For further information please refer to the Company’s Second Quarter Interim 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 10 strategic locations, we employ 2,001 people and service a diverse and broad customer base.
Management will hold a conference call to discuss the second quarter results on Thursday May 5, 2011 at 10:00 am (Toronto Time). The local dial in number for the call is (647) 427-7450 for local (Toronto) calls or toll free 1-888-231-8191. To access the live audio webcast, please log on to www.excocorp.com or directly to the webcast at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3483700 a few minutes before the event. Real Player is required for access. For those unable to participate on May 5, 2011, 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 especially with respect to consolidated and operational sales levels and earnings and the future cash flow of the Company. 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 2010 Annual Report, in our 2010 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.
|© 2010 All rights reserved|