Exco Technologies Limited - Second Quarter ended March 31, 2010 and Quarterly
Dividend Declared
TORONTO, April 28 /CNW/ - Exco Technologies Limited (TSX-XTC) today announced results for its second quarter ended March 31, 2010. In addition, the Company announced a $0.02 dividend per share which will be paid on June 30, 2010 to shareholders of record on June 16, 2010. The dividend is an "eligible dividend" in accordance with the Income Tax Act of Canada.
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6 Months ended 3 Months ended
March 31 March 31
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($000s, except per share amounts)
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2010 2009 2010 2009
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Sales $76,902 $77,677 $39,312 $33,233
Net income (loss) $4,126 ($17,032) $2,226 ($14,607)
Basic and diluted earnings
(loss) per share $0.10 ($0.42) $0.05 ($0.36)
Common shares
outstanding 40,911,000 40,674,000 40,911,000 40,674,000
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Consolidated sales for the second quarter ended March 31, 2010 were $39.3 million - an increase of $6.1 million or more than 18% over last year. Sales in the quarter, although up significantly, were eroded by a rapidly devaluing US dollar which lost 20 cents against the Canadian dollar ($1.05 this quarter compared to $1.25 last year). This decreased the quarter's sales by approximately $4.7 million as the majority of Exco's consolidated sales are denominated in US dollars. Sales in the Automotive Solutions segment in the second quarter were $14.9 million - an increase of over 67% or $6.0 million from the same quarter last year. Sales volumes at Polytech and Neocon have improved significantly from the recessionary levels experienced in mid 2009. Polytech is still below pre-2009 sales levels; however, Neocon has been surpassing its traditional pre-2009 sales levels. The resumption of Honda seat cover production at Polydesign has driven sales up by almost 33% in the current quarter over last year. The Casting and Extrusion segment reported sales of $24.4 million - a constant sales level compared to the same quarter last year. In the extrusion tooling businesses and Castool, sales increased by over 3% in the current quarter while sales in the large mould group were slightly down.
Net income for the second quarter was $2.2 million or $0.05 per share compared to a net loss of $14.6 million or $0.36 per share in the same quarter last year. The improvement in the current year's earnings was led by the Automotive Solutions segment despite a weak recovery in the European market. This segment reported income of $1.2 million in the second quarter compared to losses of $14.6 million last year. The Casting and Extrusion segment reported higher income in the second quarter of $3 million compared to income of $168 thousand in the same quarter last year.
Gross margin in the second quarter increased by 10.8 percentage points to 28.8% from the prior year level of 18%. Cost reductions in 2009 and the closure of non-profitable operations in the last several years enhanced production efficiencies and improved overhead absorption resulting in higher profitability. Gross margin increased in both segments and was most pronounced among the business units with the most exposure to the North American automotive sector. The Company's cash position at the second quarter ended March 31, 2010 increased by 43% to $16.3 million compared to $11.4 million at the beginning of the year. Operating cash flow continues to be positive despite growing revenue and rebuilding of inventories.
As 2010 continues to unfold automotive production in North America appears to be improving after a dramatic decline during 2009. We expect improvement to continue at a relatively slow yet steady pace. This should improve Exco sales and earnings in both business segments in the quarters to come.
The resurgence of more confident and revitalized management at OEM's such as General Motors and Chrysler, in particular, is resulting in firming up of orders, production scheduling and deliveries in the large mould businesses. We are also seeing the resurgence of demand for extrusion dies and Castool consumable components in North and South America as capital spending among our customers appears to be firming up.
In the Automotive Solutions segment demand at Neocon and Polytech is expected to maintain its strengthening trajectory throughout the next quarter as volumes and new launches continue in the months ahead. Improvement at Polydesign will be weighted toward the later part of the fiscal year and into 2011 as new programs totaling annualized volumes of approximately $12 million will launch during that time in addition to any improvement in Honda seat cover production that may take place.
Exco continues to benefit from its lower overall cost structure and a very strong balance sheet with no bank debt and more than $16.3 million or 40 cents per share of cash on hand. Our strong cash position and greater efficiency achieved over the last several years greatly improves our competitive position and helps mitigate the impact that the par Canadian dollar will have on our earnings.
The Company also announces that it intends to renew its normal course issuer bid to acquire up to 1,500,000 of its outstanding Common Shares, being approximately 3.7% of its outstanding shares. As at April 27, 2010, Exco had 40,911,323 Common Shares issued and outstanding. All purchases will be made through the facilities of and in accordance with the rules of the Toronto Stock Exchange and all shares purchased will be cancelled. Except where reliance is had on the Exchange's block purchase exemption, the maximum number of Shares purchasable under the bid on any trading day will be limited to 3,423 Common Shares. The average daily trading volume for the six-month period ended March 31, 2010 was 13,693 Common Shares. The normal course issuer bid will commence on May 10, 2010 and end no later than May 9, 2011. Management of Exco believes such purchases are an appropriate and desirable use of available funds. Under Exco's existing normal course issuer bid which expires on May 7, 2010, Exco has purchased 11,600 Common Shares at a weighted average price per share of $2.08. All of the Shares purchased under the existing bid have been cancelled.
(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 after April 28, 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 1,479 people and service a diverse and broad customer base.
Management will hold a conference call to discuss the second quarter results on Thursday April 29, 2010 at 10:00 am (EST). 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 or www.q1234.com a few minutes before the event. Real Player is required for access. For those unable to participate on April 29, 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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For further information: Paul Riganelli, Vice-President, Finance and Chief Financial Officer, Telephone: (905) 477-3065 ext. 7228, Website: http://www.excocorp.com
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