IBC Advanced Alloys Corp. (“
IBC” or the
“
Company”) (
TSX-V: IB; OTCQB:
IAALF) announces its financial results for the quarter
ended March 31, 2020.
In the quarter, the Company recorded comprehensive income of
$171,000, or $0.00 per share, which was driven by higher sales
across the Copper Alloys and Engineered Materials operating
divisions. Consolidated sales in the quarter of $5.9 million were
12.5% higher than the prior-year period, and year-to-date (“YTD”)
sales of $16.2 million were higher by 17.3% as compared to first
nine months of fiscal 2019.
SELECTED RESULTS: Consolidated |
|
Quarter Ended 3-31-2020 |
|
Quarter Ended 3-31-2019 |
|
Sales |
$5,851,977 |
|
$5,201,848 |
|
Operating Income (Loss) |
$133,909 |
|
$(381,885 |
) |
Net Income (Loss) |
$171,279 |
|
$(639,301 |
) |
Adjusted EBITDA |
$825,097 |
|
$(164,091 |
) |
The Copper Alloys division posted sales of $4.0 million, a 10%
increase over the prior-year period, and YTD sales of $11.4 million
were 16.4% higher than the comparable period of fiscal
2019.
The Engineered Materials division posted sales of $1.9 million
in the quarter, an increase of 18% over the prior-year
period. Year-to-date sales of $4.0 million were 19.8% higher
than in comparable prior-year period.
Consolidated gross margin also improved in the quarter to 20.4%,
from 11.9% in the prior-year period, and rose to 15.9%
year-to-date, from 10.1% in the nine months ended March 31,
2019.
Adjusted earnings before interest, taxes, depreciation, and
amortization (“Adjusted EBITDA”) for the quarter totaled $825,000,
which reversed an Adjusted EBITDA loss of $167,000 for the
prior-year period. Year-to-date Adjusted EBITDA totaled
$891,000, as compared to ($891,000) in the prior-year period.
Both operating divisions posted positive Adjusted EBITDA for the
quarter and on a year-to-date basis.
“The Board and I are very pleased with the strong sales
performance and gross margin improvements in the quarter across
both our Engineered Materials and Copper Alloys divisions,” said
Mark A. Smith, IBC Board Chairman. “We were especially
pleased to see the strong performance and profitable operations of
our Engineered Materials division, which specializes in
high-performance beryllium-aluminum alloys for both defense and
commercial applications.”
“The IBC team’s ability to achieve profitability in the midst of
challenging and volatile market conditions highlights the potential
of this team to continue improving operational efficiencies,
increasing gross margins, expanding sales, and delivering improved
shareholder value,” Mr. Smith added.
EMC Division Highlights
SELECTED RESULTS: Engineered Materials
Division |
|
Quarter Ended 3-31-2020 |
|
Quarter Ended 3-31-2019 |
|
Sales |
$1,872,695 |
|
$1,584,706 |
|
Operating Income (Loss) |
$272,352 |
|
$(90,265 |
) |
Net Income (Loss) |
$265,225 |
|
$(95,761 |
) |
Adjusted EBITDA |
$501,077 |
|
$17,836 |
|
The Engineered Materials division posted comprehensive income of
$265,000 in the quarter, which reversed a comprehensive loss of
$96,000 in the prior-year period.
Engineered Materials sales in the quarter of $1.9 million were
18% higher than sales of $1.6 million in the prior-year
period. Year to date, Engineered Materials sales grew to $4.8
million, a 20% increase over sales of $4.0 million in the prior
year-to-date period. This change was largely driven by
increased demand for beryllium-aluminum (“BeAl”) products sold to
semiconductor equipment manufacturers.
Adjusted EBITDA for the division was $501,000 in the quarter,
which compared favorably to Adjusted EBITDA of $15,000 in the
prior-year period. Year to date, Adjusted EBITDA for the
division was $791,000, which compared to Adjusted EBITDA of
($206,000) in the prior year-to-date period.
Demand for BeAl products used in defense applications remained
steady in fiscal year 2020 but is expected to strengthen as rates
of production for F-35 Lightning II aircraft begin to accelerate
beyond Low Rates of Initial Production (“LRIP”). For example,
according to data released publicly by our customer
Lockheed-Martin, the annual rate of production of the F-35 aircraft
is expected to nearly double by 2022 from 2018 production
levels. IBC is continuing to pursue additional contracts for
high-performance BeAl products in other defense-sector
platforms.
Copper Alloys Division Highlights
SELECTED RESULTS: Copper Alloys
Division |
|
Quarter Ended 3-31-2020 |
|
Quarter Ended 3-31-2019 |
|
Sales |
$3,979,282 |
|
$3,617,142 |
|
Operating Income (Loss) |
$173,350 |
|
$1,061 |
|
Adjusted EBITDA |
$321,256 |
|
$90,728 |
|
Net Income (Loss) |
$97,705 |
|
$(96,487 |
) |
The Copper Alloys division posted a net income of $98,000 in the
quarter, which reversed a net loss of $96,000 in the prior-year
period. Sales of $4.0 million in the quarter were 10% higher
than sales of $3.6 million in fiscal Q3 of 2019. Year-to-date
Copper Alloys sales were $11.4 million, a 16% increase over sales
of $9.8 million in the prior year-to-date period.
Average gross margin of 14.9% in the quarter compared to 14.1%
in the prior-year period, largely as a result of fixed costs being
spread over a larger production volume.
Adjusted EBITDA for the division was $322,000 in the quarter,
which compared favorably to Adjusted EBITDA of $91,000 in the
prior-year period. Year to date, Adjusted EBITDA was
$502,000, which compared to Adjusted EBITDA of ($80,000) in the
prior year-to-date period.
Higher demand for copper alloy products has been driven
primarily by strong demand in electronics, marine defense and power
generation markets. Growth has also accelerated due in part
to the division’s ability to produce more value-added products as a
result of several strategic capital equipment upgrades made in
fiscal year 2019.
FISCAL Q2 2020 SEGMENT AND CONSOLIDATED OPERATIONS
RESULTS
Following is a summary of the Company’s results of operations to
Adjusted EBITDA for the third fiscal quarter of 2020, on a
consolidated and segment-by-segment basis:
|
Three Months Ended |
|
|
Three Months Ended |
|
March 31, 2020 |
|
|
March 31, 2019 |
|
Copper |
|
Eng. |
|
Corp. |
|
Consol- |
|
|
Copper |
|
Eng. |
|
Corp. |
|
Consol- |
|
|
Alloys |
|
Mat. |
|
|
|
idated |
|
|
Alloys |
|
Mat. |
|
|
|
idated |
|
|
($000s) |
|
($000s) |
|
($000s) |
|
($000s) |
|
|
($000s) |
|
($000s) |
|
($000s) |
|
($000s) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
3,979 |
|
1,873 |
|
- |
|
5,852 |
|
|
3,617 |
|
1,585 |
|
- |
|
5,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Materials |
2,149 |
|
418 |
|
- |
|
2,567 |
|
|
1,869 |
|
393 |
|
- |
|
2,262 |
|
Labor |
561 |
|
350 |
|
- |
|
911 |
|
|
553 |
|
402 |
|
- |
|
955 |
|
Subcontract |
84 |
|
45 |
|
- |
|
129 |
|
|
109 |
|
77 |
|
- |
|
186 |
|
Overhead |
497 |
|
252 |
|
- |
|
749 |
|
|
470 |
|
421 |
|
- |
|
891 |
|
Depreciation |
141 |
|
198 |
|
- |
|
339 |
|
|
99 |
|
99 |
|
- |
|
198 |
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
finished goods |
(45 |
) |
9 |
|
- |
|
(36 |
) |
|
(2 |
) |
93 |
|
- |
|
91 |
|
|
3,387 |
|
1,272 |
|
- |
|
4,659 |
|
|
3,098 |
|
1,485 |
|
- |
|
4,583 |
|
Gross profit |
592 |
|
601 |
|
- |
|
1,193 |
|
|
519 |
|
100 |
|
- |
|
619 |
|
Gross
margin |
14.9% |
|
32.1% |
|
|
|
20.4% |
|
|
14.3% |
|
6.3% |
|
|
|
11.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A expenses |
419 |
|
328 |
|
312 |
|
1,059 |
|
|
518 |
|
190 |
|
293 |
|
1,001 |
|
Income
(loss) before other items |
173 |
|
273 |
|
(312 |
) |
134 |
|
|
1 |
|
(90 |
) |
(293 |
) |
(382 |
) |
Other income (expense) |
(75 |
) |
(8 |
) |
120 |
|
37 |
|
|
(97 |
) |
(6 |
) |
(154 |
) |
(257 |
) |
Total comprehensive income (loss) |
98 |
|
265 |
|
(192 |
) |
171 |
|
|
(96 |
) |
(96 |
) |
(447 |
) |
(639 |
) |
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add back (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense |
- |
|
- |
|
- |
|
- |
|
|
- |
|
(2 |
) |
(1 |
) |
(3 |
) |
Interest expense |
71 |
|
12 |
|
168 |
|
251 |
|
|
77 |
|
8 |
|
125 |
|
210 |
|
Depreciation, amortization, & impairment |
149 |
|
221 |
|
- |
|
370 |
|
|
101 |
|
98 |
|
- |
|
199 |
|
Stock-based compensation expense (non-cash) |
4 |
|
3 |
|
26 |
|
33 |
|
|
9 |
|
7 |
|
50 |
|
66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
322 |
|
501 |
|
2 |
|
825 |
|
|
91 |
|
15 |
|
(273 |
) |
(167 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-IFRS MEASURES
To supplement its consolidated financial statements, which are
prepared and presented in accordance with IFRS, IBC uses “operating
income (loss)” and “Adjusted EBITDA”, which are non-IFRS financial
measures. IBC believes that operating income (loss) helps identify
underlying trends in the business that could otherwise be distorted
by the effect of certain income or expenses that the Company
includes in loss for the period, and provides useful information
about core operating results, enhances the overall understanding of
past performance and future prospects, and allows for greater
visibility with respect to key metrics used by management in
financial and operational decision-making.
The Company believes that Adjusted EBITDA is a useful indicator
for cash flow generated by the business that is independent of
IBC’s capital structure.
Operating income (loss) and Adjusted EBITDA should not be
considered in isolation or construed as an alternative to loss for
the period or any other measure of performance or as an indicator
of our operating performance. Operating income (loss) and Adjusted
EBITDA presented here may not be comparable to similarly titled
measures presented by other companies. Other companies may
calculate similarly titled measures differently, limiting their
usefulness as comparative measures to IBC’s data.
Operating Income (Loss)
Operating income (loss) represents loss for the period,
excluding foreign exchange loss, interest expense, interest income,
other income (expense) and income taxes that the Company does not
believe are reflective of its core operating performance during the
periods presented. A reconciliation of the third quarter income and
the nine-month period ended March 31, 2020 loss to operating income
follows:
Quarter ended March 31 |
2020 |
|
|
2019 |
|
|
($000s) |
|
|
($000s) |
|
Income (loss) for the period |
171 |
|
|
(639 |
) |
Foreign exchange (gain) loss |
(288 |
) |
|
30 |
|
Interest expense |
251 |
|
|
210 |
|
Loss on disposal of
assets |
5 |
|
|
20 |
|
Interest income |
- |
|
|
- |
|
Other income |
(5 |
) |
|
(5 |
) |
Arbitration award
liability |
- |
|
|
- |
|
Income taxes |
- |
|
|
2 |
|
Operating income (loss) |
134 |
|
|
(382 |
) |
Nine months ended March 31 |
2020 |
|
|
2019 |
|
|
($000s) |
|
|
($000s) |
|
Loss for the period |
(1,149 |
) |
|
(2,494 |
) |
Foreign exchange (gain) loss |
(288 |
) |
|
(1 |
) |
Interest expense |
805 |
|
|
708 |
|
Loss on disposal of
assets |
5 |
|
|
20 |
|
Interest income |
- |
|
|
(6 |
) |
Other income |
(17 |
) |
|
(18 |
) |
Arbitration award
liability |
- |
|
|
- |
|
Income taxes |
7 |
|
|
5 |
|
Operating loss |
(637 |
) |
|
(1,786 |
) |
Adjusted EBITDA
Adjusted EBITDA represents income (loss) for the period before
interest, income taxes, depreciation, amortization and share-based
compensation. A reconciliation of the Company’s third quarter
income to Adjusted EBITDA follows:
Quarter ended March 31 |
2020 |
|
|
2019 |
|
|
($000s) |
|
|
($000s) |
|
|
|
|
|
|
|
Income (loss) for the period |
171 |
|
|
(639 |
) |
|
|
|
|
|
|
Tax expense |
- |
|
|
(3 |
) |
Interest expense |
251 |
|
|
210 |
|
Depreciation, &
amortization, |
370 |
|
|
199 |
|
Stock-based compensation
expense (non-cash) |
33 |
|
|
66 |
|
|
|
|
|
|
|
Adjusted EBITDA |
825 |
|
|
(167 |
) |
Nine months ended March 31 |
2020 |
|
|
2019 |
|
|
($000s) |
|
|
($000s) |
|
|
|
|
|
|
|
Loss for the period |
(1,149 |
) |
|
(2,494 |
) |
|
|
|
|
|
|
Tax expense |
(7 |
) |
|
(5 |
) |
Interest expense |
805 |
|
|
708 |
|
Depreciation, &
amortization, |
1,135 |
|
|
582 |
|
Stock-based compensation
expense (non-cash) |
107 |
|
|
318 |
|
|
|
|
|
|
|
Adjusted EBITDA |
891 |
|
|
(891 |
) |
For more information on IBC and its innovative alloy products,
go here.
On Behalf of the Board of Directors:
"Mark A. Smith”
Mark A. Smith, Chairman of the Board
CONTACTS: Mark A. Smith, Chairman of the Board
Jim Sims, Investor and Public Relations IBC Advanced Alloys Corp.
+1 (303) 503-6203 Email: jim.sims@ibcadvancedalloys.com Website:
www.ibcadvancedalloys.com @IBCAdvanced $IB $IAALF
ABOUT IBC ADVANCED ALLOYS CORP.
IBC is a leading beryllium and copper advanced alloys company
serving a variety of industries such as defense, aerospace,
automotive, telecommunications, precision manufacturing, and
others. IBC's Copper Alloys Division manufactures and distributes a
variety of copper alloys as castings and forgings, including
beryllium copper, chrome copper, and aluminum bronze. IBC's
Engineered Materials Division makes the Beralcast® family of
alloys, which can be precision cast and are used in an increasing
number of defense, aerospace, and other systems, including the F-35
Joint Strike Fighter. IBC's has production facilities in Indiana,
Massachusetts, Pennsylvania, and Missouri. The Company's common
shares are traded on the TSX Venture Exchange under the symbol "IB"
and the OTCQB under the symbol "IAALF".
CAUTIONARY STATEMENTS
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release. This disclosure contains a
forward-looking statements. Forward-looking statements
normally contain words like ‘believe’, ‘expect’, ‘anticipate’,
‘plan’, ‘intend’, ‘continue’, ‘estimate’, ‘may’, ‘will’, ‘should’,
‘ongoing’ and similar expressions, and within this news release
include any statements (express or implied) respecting anticipated
sales trends in fiscal 2020, expected demand for the Company’s
products and expectations as to additional quantities to be sold
under the Lockheed Martin contract. Although IBC believes that the
expectations reflected in these forward-looking statement are
reasonable, forward-looking statements, by their very nature, are
subject to inherent risks and uncertainties and are based on
assumptions, both general and specific, which give rise to the
possibility that actual results or events could differ materially
from our expectations expressed in or implied by such
forward-looking statement. The forward looking statements
made by the Company in this press release are based on its
experience, perception of historical trends, current conditions,
expected future developments and other factors it believes are
appropriate in the circumstances. As a result, we cannot
guarantee that any forward-looking statement will materialize and
we caution you against relying on any of these forward-looking
statements. IBC makes no commitment to revise or update any
forward-looking statements in order to reflect events or
circumstances after the date any such statement is made, except as
required by applicable law. Additional information identifying
risks and uncertainties is contained in IBC’s filings, including
its Annual Information Form for the fiscal year ended June 30,
2019, available at www.sedar.com.
1 We report non-IFRS measures such as "Adjusted EBITDA" and
“Operating Income.” Please see information on this and other
non-IFRS measures in the "Non-IFRS Measures" section of the
Company’s MD&A and in this news release.
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