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Exco Technologies Limited - Results for Fourth Quarter and Year Ended September 30, 2014


  • Sales up 73% in the quarter
  • Earnings up 20% in the quarter
  • $31.2 million cash on hand
  • $10.0 million cash, net of bank indebtedness
  • EBITDA up 41% to $15.6 million in the quarter

TORONTO, Nov. 26, 2014 /CNW/ - Exco Technologies Limited (TSX-XTC) today announced results for its fourth quarter and year ended September 30, 2014. In addition, the Company announced the quarterly dividend of $0.05 per common share which will be paid on December 23, 2014 to shareholders of record on December 12, 2014. The dividend is an "eligible dividend" in accordance with the Income Tax Act of Canada.

Three Months ended
September 30
Twelve Months ended
September 30
(in $ millions except per share amounts)
2014 2013 2014 2013
Sales $110.9 $64.0 $368.3 $244.6
Net income for the period $8.1 $6.8 $30.7 $23.6
Earnings per share from net income
Basic $0.19 $0.17 $0.74 $0.58
Diluted $0.19 $0.16 $0.73 $0.58
Total assets $290.6 $195.1 $290.6 $195.1
Cash dividend paid per share $0.05 $0.045 $0.195 $0.173
EBITDA $15.6 $11.0 $53.9 $43.0
Adjusted net income $9.2 $7.1 $34.6 $26.0
Earnings per share from adjusted net income
Basic $0.22 $0.17 $0.83 $0.64
Diluted $0.22 $0.17 $0.83 $0.63

Consolidated sales for the fourth quarter ended September 30, 2014 were $110.9 million – an increase of 73% compared to last year. Full year, consolidated sales were $368.3 million – up 51% over last year. The inclusion in the quarter of Automotive Leather Group (Pty) Company ("ALC") which was acquired by Exco on March 1, 2014 is primarily responsible for the significantly higher sales. However, Exco's other businesses also grew by 20% in the quarter and 16% in the year.

The Automotive Solutions segment reported significantly higher sales of $64.9 million in the fourth quarter and $198.8 million for the year – increases of 173% and 116% respectively. ALC sales in the quarter were $34.3 million and for the year (7 months) were $83.9 million. The other businesses in this segment experienced strong growth in both the quarter and the year by 29% and 25% respectively. Polytech and Neocon sales in North America continued at elevated levels - sustained by strong vehicle unit sales as well as new product launches for refreshed, redesigned or entirely new vehicle models. Polydesign's European sales increased substantially over prior year as the smooth launch of new programs continued at a strong pace and European vehicle unit sales improved modestly.

The Casting and Extrusion segment reported sales of $46.0 million for the fourth quarter and $169.4 million for the year – increases of 14% for the quarter and 11% for the year. All businesses in the segment contributed to these sales increases. Sales at the Extrusion group were supported by general market improvement in North America and improving market share at Exco Colombia and Texas. Sales at the large mould group and Castool reflected continuing strong market conditions in North America and Asia both in the quarter and the year.

Consolidated net income for the fourth quarter was $8.1 million or diluted earnings of $0.19 per share compared to consolidated net income of $6.8 million or diluted earnings of $0.16 per share last year – an increase of 20%. Full year consolidated net income was $30.7 million or diluted earnings of $0.73 per common share compared to $23.6 million or diluted earnings of $0.58 per common share last year – an increase of 30%.

The table below includes adjusted net income and adjusted earnings per share, which are non-IFRS measures, and reconciles reported net income and reported earnings per share to adjusted net income and adjusted earnings per share, where the adjustments are for non-operational expenses and expenses higher than historical levels. Management believes adjusted net income and adjusted earnings per share are useful measures that facilitate period-to-period operating comparisons. Adjusted net income and adjusted earnings per share do not have any standardized meanings prescribed by IFRS and are not necessarily comparable to similar measures presented by other issuers.

Q4-2014 FY-2014 Q4-2013 FY-2013
Reported Net income $8,123 $30,656 $6,750 $23,632
Earnings per share:
Basic $0.19 $0.74 $0.17 $0.58
Diluted $0.19 $0.73 $0.16 $0.58
Non-operating and/or unusual items, net of income taxes:
Withholding tax on dividend repatriation of surplus from subsidiary 113 220 - 1,530
Severance 267 864 231 317
Stock option expense 37 638 76 275
Brazil and Thailand start-up losses 367 1,466 62 219
ALC amortization of customer relationship fair value adjustment 293 367 - -
ALC due-diligence and acquisition expenses - 390 - -
1,741 4,609 370 2,341
Adjusted Net Income $9,200 $34,601 $7,120 $25,973
Earnings per share
Basic $0.22 $0.83 $0.17 $0.64
Diluted $0.22 $0.83 $0.17 $0.63

The adjusted net income in the current quarter and for the full year were $9.2 million and $34.6 million or adjusted diluted earnings of $0.22 and $0.83 per common share.

Notably, start-up losses at our greenfield facilities in Brazil and Thailand were almost completely offset by improvement in earnings at our two recently acquired extrusion tooling operations in Colombia and Texas.
The Automotive Solutions segment reported higher pretax profit of $6.3 million in the fourth quarter – an increase of 41% over last year. For the full year, the segment also reported higher pretax profit of $23.9 million – an increase over last year of 41% as well. In both Europe and North America, stronger sales provided increased earnings. This earnings improvement took place in spite of relatively weak performance at ALC South Africa/Lesotho which experienced elevated inventory, logistics and production relocation costs. ALC is currently launching the Mini seat cover program, relocating production from South Africa to Lesotho and in the fourth quarter has absorbed the impact of customer summer shutdowns in August.

The Casting and Extrusion segment reported pretax profit of $6.8 million in the fourth quarter compared to $5.1 million pretax profit quarter last year – an increase of 34%. For the full year, the segment reported pretax profit of $25.0 million compared to $21.9 million last year – an increase of 14%. These improvements took place in spite of start-up costs at our two greenfield facilities - Extrusion Brazil and Castool Thailand. Excluding these start-up costs, which are expect to recede over the next two quarters, pretax income in the current quarter and full year for this segment would have been $7.3 million and $27.0 million compared to $5.2 million and $22.2 million in the same periods last year. This represents an increase of 42% in the quarter and 21% full year.

Consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") for the fourth quarter was $15.6 million compared to $11.0 million in the same quarter last year – an increase of 41%. For the full year, consolidated EBITDA was $53.9 million compared to $43.0 million last year – an increase of 26%.
Operating cash flow before net changes in non-cash working capital increased this year to $42.0 million from $32.1 million in fiscal 2013. Net change in non-cash working capital was $1.6 million cash used compared to $9.2 million cash used last year. Cash provided by operating activities increased to $40.4 million compared to $22.9 million last year – an increase of 77%. Exco had no net bank debt as at September 30, 2014 even after spending $17.3 in cash for the ALC acquisition and closed the year with net cash deposits of $10.0 million compared to $5.4 million upon closing of the ALC acquisition in Q2 and $26.1 million at last year end.
The outlook for Exco over the near term should continue to remain strong. We continue to see a buoyant and dynamic quoting environment. In addition to the recently announced 10 speed transmission tooling program for General Motors, there are numerous small cylinder powertrain programs and structural parts coming up for quote. Demand for extrusion dies and Castool consumable componentry is also expected to remain strong as both these business groups expand from their traditional base in North America to South American and Asian markets. The Automotive Solutions group is also actively engaged in quoting on both existing programs and new content as well. The recent award of a $35 million seat cover program for Audi in Europe is a very favorable development which helps balance our ALC customer base. Management expects other businesses in this group to also benefit from this vibrant quoting environment.

All our businesses are experiencing a favorable input cost environment with relatively abundant supply of both tool grade steel and resin sheet and other polymer-based materials. Pricing is also stable with little upward pressure as both global sourcing by our business units and falling prices for key commodities such as oil and base metals commodities, although mitigated by the strengthening US dollar, take effect.
(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)

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 5,009 people and service a diverse and broad customer base.

To access the live audio webcast, please log on to www.excocorp.com or directly to the web cast at http://www.newswire.ca/en/webcast/detail/1437209/1597379 a few minutes before 10:00 AM on November 27, 2014. Microsoft Media Player is required for access. For those unable to listen on November 27, 2014, an archived version will be available on the Exco website.

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 the Outlook section but also elsewhere throughout this document. 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 and Thailand 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.

For further information:

Source: Exco Technologies Limited (TSX-XTC)
Contact: Paul Riganelli, Senior Vice President and Chief Operating Officer
Telephone: (905) 477-3065 Ext 7228
Website: http://www.excocorp.com

 

 
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